##### 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 October 31, 2002                          Commission File No. 0-15284

NATIONAL LAMPOON, INC.
(formerly J2 Communications, a California corporation
(Exact name of registrant as specified in its charter)

|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|Delaware                                       |  | 95-4053296                          
|(State or other jurisdiction
of incorporation) |  | (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 o

As of December 12, 2002 the registrant had 1,469,971 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 10-K                                                   
|PART IV.                                  
|                                           | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.                    
|SIGNATURES                                
|EXHIBIT 99.1                              
|EXHIBIT 99.2                              



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1  Financial Statements




NATIONAL LAMPOON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |               |   |            |           | 
|------------------------------------ | ------------------------------------------ | ----------------- | ------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------ | ------------- | ---------- | ------------- | - | ---------- | --------- | 
|                                     |                                            |                   |                                                                                                               |                                                                                        |        | AS OF         |            | AS OF        
|                                     |                                            |                   |                                                                                                               |                                                                                        |        | OCT. 31, 2002 |            | JUL. 31, 2002
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   |                                                                                                               |                                                                                        |        | (UNAUDITED)   |            |               |   |           
|                                     | CURRENT ASSETS                             |                   |                                                                                                               |                                                                                        |        |               |            |               |  
|                                     |                                            |                   | Cash and cash equivalents                                                                                     |                                                                                        | $      | 103,103       |            |               | $ | 1,024,207  |          
|                                     |                                            |                   |                                                                                                               | Accounts receivable                                                                    |        |               | 25,000     |               |   |            |           | 
|                                     |                                            |                   | Prepaid expenses and other current assets                                                                     |                                                                                        |        | 27,613        |            |               |   | 17,323     |          
|                                     |                                            |                   |                                                                                                               | Capitalized production costs                                                           |        |               | 113,110    |               |   |            |           | 
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   |                                                                                                               | Total current assets                                                                   |        |               | 268,826    |               |   |            | 1,041,530 | 
|                                     | NON-CURRENT ASSETS                         |                   |                                                                                                               |                                                                                        |        |               |            |               |  
|                                     |                                            |                   | Fixed assets, net of accumulated depreciation                                                                 |                                                                                        |        | 67,463        |            |               |   | 7,123      |          
|                                     |                                            |                   | Intangible assets, net of accumulated amortization                                                            |                                                                                        |        | 3,177,154     |            |               |   | 2,696,154  |          
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   |                                                                                                               | Total non-current assets                                                               |        |               | 3,244,617  |               |   |            | 2,703,277 | 
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     | TOTAL ASSETS                               |                   | $                                                                                                             | 3,513,443                                                                              |        |               | $          | 3,744,807     |  
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|LIABILITIES AND SHAREHOLDERS EQUITY |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|CURRENT LIABILITIES                  |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   | Accounts payable                                                                                              |                                                                                        | $      | 157,925       |            |               | $ | 310,951    |          
|                                     |                                            |                   | Accrued expenses                                                                                              |                                                                                        |        | 448,650       |            |               |   | 490,244    |          
|                                     |                                            |                   | Notes payable                                                                                                 |                                                                                        |        | 415,000       |            |               |   | 415,000    |          
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   |                                                                                                               | TOTAL LIABILITIES                                                                      |        |               | 1,021,575  |               |   |            | 1,216,195 | 
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            | MINORITY INTEREST |                                                                                                               |                                                                                        | 61,717 |               |            |               |  |           
|                                     | SHAREHOLDERS EQUITY                       |                   |                                                                                                               |                                                                                        |        |               |            |               |  
|                                     |                                            |                   |                                                                                                               | Series B Preferred Stock, no par value, 68,406 shares
Authorized, 46,757 shares issued |        |               | 3,236,618  |               |   |            | 2,585,318 | 
|                                     |                                            |                   | Common Stock, no par value, 15,000,000 shares
authorized, 1,466,471 and 1,385,483 shares
issued, respectively |                                                                                        |        | 11,941,041    |            |               |   | 9,986,762  |          
|                                     |                                            |                   | Less: Note receivable on common stock                                                                         |                                                                                        |        | (152,900      | )          |               |   | (151,460   | )        
|                                     |                                            |                   |                                                                                                               | Deferred compensation                                                                  |        |               | (1,122,316 | )             |   |            |          | 
|                                     |                                            |                   | Accumulated deficit                                                                                           |                                                                                        |        | (11,472,292   | )          |               |   | (9,892,008 | )        
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     |                                            |                   |                                                                                                               | TOTAL SHAREHOLDERS EQUITY                                                             |        |               | 2,430,151  |               |   |            | 2,528,612 | 
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              
|                                     | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                   | $                                                                                                             | 3,513,443                                                                              |        |               | $          | 3,744,807     |  
|                                     |                                            |                   |                                                                                                               |                                                                                        |        |               |            |              

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

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NATIONAL LAMPOON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |   |         | 
|---------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------ | --------------------------------------------- | ---------------------------- | ---------- | -------------- | --------- | --------- | -------- | - | ------- | 
|                                                     |                                                              |                                            |                                               |                              |            | THREE MONTHS  
|                                                     |                                                              |                                            |                                               |                              |            | ENDED OCT. 31,
|                                                     |                                                              |                                            |                                               |                              |            |               
|                                                     |                                                              |                                            |                                               |                              |            | 2002           |           | 2001     
|                                                     |                                                              |                                            |                                               |                              |            |                |           |          
|REVENUES                                             |                                                              |                                            |                                               |                              |            |                |           |          
|                                                     |                                                              | Trademark                                  |                                               | $                            | 72,274     |                |           | $         | 151,947  |  
|                                                     |                                                              | Video                                      |                                               |                              | 48         |                |           |           | 299      |  
|                                                     |                                                              | Internet                                   |                                               |                              | 1,867      |                |           |           | 501      |  
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     |                                                              |                                            |                                               | Total revenue                |            | $              | 74,189    |           |          | $ | 152,747 | 
|COSTS AND EXPENSES                                   |                                                              |                                            |                                               |                              |            |                |           |          
|                                                     |                                                              | Costs related to trademark revenue         |                                               |                              | 5,432      |                |           |           | 7,008    |  
|                                                     |                                                              | Costs related to video revenue             |                                               |                              |            |                |           |           | 13       |  
|                                                     |                                                              | Costs related to internet revenue          |                                               |                              | 9,537      |                |           |           | 7,193    |  
|                                                     |                                                              |                                            | Production Costs                              |                              |            | 163,639        |           |           |          |  |        
|                                                     |                                                              | Amortization of intangible assets          |                                               |                              | 60,000     |                |           |           | 60,000   |  
|                                                     |                                                              | Selling, general & administrative expenses |                                               |                              | 823,834    |                |           |           | 579,117  |  
|                                                     |                                                              |                                            | Stock, warrants & options issued for services |                              |            | 630,388        |           |           |          |  |        
|                                                     |                                                              | Stock appreciation rights expense          |                                               |                              |            |                |           |           | (275.526 | )
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     |                                                              |                                            |                                               | Total costs and expenses     |            |                | 1,692,830 |           |          |   | 377,805 | 
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     |                                                              | OPERATING (LOSS)                           |                                               |                              | (1,618,641 | )              |           |           | (225,058 | )
|OTHER INCOME                                         |                                                              |                                            |                                               |                              |            |                |           |          
|                                                     |                                                              | Interest income                            |                                               |                              | 2,698      |                |           |           | 2,997    |  
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     |                                                              |                                            |                                               | Total other income/(expense) |            |                | 2,698     |           |          |   | 2,997   | 
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|LOSS BEFORE MINORITY INTEREST AND INCOME
TAXES       |                                                              |                                            | (1,615,943                                    | )                            |            |                | (222,061  | )        
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|Minority interest in loss of consolidated subsidiary |                                                              |                                            | 37,283                                        |                              |            |                |          |          
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|Provision for income taxes                           |                                                              |                                            | 1,623                                         |                              |            |                | 800       |          
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|NET (LOSS)                                           |                                                              |                                            | ($1,580,283                                   | )                            |            |                | ($222,861 | )        
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     | Net (loss) per share  basic and diluted                     |                                            |                                               | ($1.10                       | )          |                |           | ($0.16    | )       
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  
|                                                     | Weighted average number of common
shares  basic and diluted |                                            |                                               | 1,437,473                    |            |                |           | 1,378,124 |         
|                                                     |                                                              |                                            |                                               |                              |            |                |           |           |          |  

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

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

|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |   |         |          |  
|----------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---------------------------- | ---------------------------------------------------------------- | ------------------------------------------------ | -------- | -------------------- | ------- | --------- | - | ------- | -------- | -
|                                                      |                                                                                           |                              |                                                                  |                                                  |          | FOR THE THREE MONTHS
|                                                      |                                                                                           |                              |                                                                  |                                                  |          | ENDED OCTOBER 31,   
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                     
|                                                      |                                                                                           |                              |                                                                  |                                                  |          | 2002                 |         | 2001     
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |          
|CASH FLOWS FROM OPERATING ACTIVITIES:                 |                                                                                           |                              |                                                                  |                                                  |          |                      |         |          
|                                                      | Net loss                                                                                  |                              |                                                                  | ($1,580,283                                      | )        |                      |         | ($222,861 | )
|                                                      | Adjustments to reconcile net loss to net cash
provided by/(used in) operating activities: |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      |                                                                                           |                              | Depreciation and amortization                                    |                                                  |          | 69,734               |         |           |   | 63,429  |         
|                                                      |                                                                                           |                              |                                                                  | Increase/(decrease) in stock appreciation rights |          |                      |        |           |   |         | (275,526 | )
|                                                      |                                                                                           |                              | Other                                                            |                                                  |          | (1,440               | )       |           |   | (1,440  | )       
|                                                      |                                                                                           |                              | Stock, warrants and options issued for services                  |                                                  |          | 630,388              |         |           |   |        |         
|                                                      | Changes in assets and liabilities:                                                        |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      |                                                                                           |                              | (Increase)/decrease in accounts receivable                       |                                                  |          | (25,000              | )       |           |   |        |         
|                                                      |                                                                                           |                              | (Increase)/decrease in prepaid expenses and
other current assets |                                                  |          | (10,290              | )       |           |   | 419     |         
|                                                      |                                                                                           |                              | (Increase)/decrease in other assets                              |                                                  |          |                      |         |           |   |        |         
|                                                      |                                                                                           |                              | Increase/(decrease) in accounts payable                          |                                                  |          | (153,025             | )       |           |   | 26,073  |         
|                                                      |                                                                                           |                              | Increase/(decrease) in accrued expenses                          |                                                  |          | (41,593              | )       |           |   | 242,539 |         
|                                                      |                                                                                           |                              | Increase/(decrease) in extension payments                        |                                                  |          |                     |         |           |   | 225,000 |         
|                                                      |                                                                                           |                              | Minority interest                                                |                                                  |          | (37,283              | )       |           |   |        |         
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      | NET CASH AND CASH EQUIVALENTS
PROVIDED BY/ (USED IN) OPERATING ACTIVITIES                 |                              |                                                                  | (1,148,794                                       | )        |                      |         | 57,633    |  
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                 |                                                                                           |                              |                                                                  |                                                  |          |                      |         |          
|                                                      | Acquisition of Burly Bear networks                                                        |                              |                                                                  | (200,000                                         | )        |                      |         |          |  
|                                                      | Acquisition of equipment                                                                  |                              |                                                                  | (6,518                                           | )        |                      |         |          |  
|                                                      | Production costs                                                                          |                              |                                                                  | (18,667                                          | )        |                      |         |          |  
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      | NET CASH AND CASH EQUIVALENTS                                                             |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      |                                                                                           | USED IN INVESTING ACTIVITIES |                                                                  |                                                  | (225,185 | )                    |         |           |  |        
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                 |                                                                                           |                              |                                                                  |                                                  |          |                      |         |          
|                                                      | Proceeds from Series B preferred stock issuance                                           |                              |                                                                  | 430,000                                          |          |                      |         |          |  
|                                                      | Exercise of stock options                                                                 |                              |                                                                  | 22,875                                           |          |                      |         | 67,601    |  
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      | NET CASH AND CASH EQUIVALENTS
PROVIDED BY FINANCING ACTIVITIES                            |                              |                                                                  | 452,875                                          |          |                      |         | 67,601    |  
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|NET INCREASE /(DECREASE) IN CASH AND
CASH EQUIVALENTS |                                                                                           |                              | (921,104                                                         | )                                                |          |                      | 125,234 |          
|CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD      |                                                                                           |                              | 1,024,207                                                        |                                                  |          |                      | 324,472 |          
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|CASH AND CASH EQUIVALENTS
AT END OF PERIOD            |                                                                                           | $                            | 103,103                                                          |                                                  |          | $                    | 449,706 |          
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  
|                                                      |                                                                                           |                              | Non cash investing activities:                                   |                                                  |          |                      |         |           |   |         |         
|                                                      |                                                                                           |                              | Common stock issued in Burly Bear acquisition                    |                                                  | $        | 400,000              |         |           |   |         |         
|                                                      |                                                                                           |                              |                                                                  |                                                  |          |                      |         |           |  

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

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NATIONAL LAMPOON AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
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. These financial
statements should be read in conjunction with the financial statements and
related footnotes for the year ended July 31, 2002 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 October 31, 2002, and the results of operations and cash flows
for the three month periods ended October 31, 2002 and 2001 have been included.

The results of operations for the three month period ended October 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, 2002.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. Since the consummation of the Reorganization
Transactions, 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 capital received from NLAG Group in
connection with the securities purchased in connections with the Reorganization
Transactions, and the subsequent investment by the NLAG Group, and Messrs.
Laikin, Skjodt and Durham or warrants received in that transaction, to fund
operations. Since the consummation of the transaction, 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.
We are currently exploring other transactions to secure additional financing,
although in the near term expect to continue to rely on the funding provided by
NLAG and its affiliates. Our financial statements are subject to a going
concern qualification, which could make any additional financing transaction
more difficult to consummate.

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.

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NATIONAL LAMPOON AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B  EARNINGS PER SHARE (CONTINUED)

Options to purchase 28,159 and 74,566 common shares are not included in the
calculation of diluted earnings per share during the three months ended October
31, 2002 and 2001 respectively because their inclusion would be anti-dilutive.

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, and income taxes. Selling, general
and administrative expenses not specifically attributable to any segment have
been allocated equally between the trademark and Internet segments (none to the
television segment until significant operations commence). Summarized
financial information for the three month periods ended October 31, 2002 and
2001 concerning the Companys segments is as follows:

|                                    |                                 |                                 |         |           |          |          |       |            |           |       |   |           |   |   |         |             |           |  
|----------------------------------- | ------------------------------- | ------------------------------- | ------- | --------- | -------- | -------- | ----- | ---------- | --------- | ----- | - | --------- | - | - | ------- | ----------- | --------- | -
|                                    |                                 |                                 |         | Trademark |          | Internet |       | Television |           | Total
|                                    |                                 |                                 |         |           |          |          |       |            |           |      
|Three Months Ended October 31, 2002 |                                 |                                 |         |           |          |          |       |            |           |       |   |           |   |   |         |            
|Segment revenue                     |                                 | $                               | 72,000  |           |          | $        | 2,000 |            |           |       |  |           |   | $ | 74,000  |            
|                                    | Segment operating income/(loss) |                                 |         | ($710,000 | )        |          |       | ($611,000  | )         |       |   | ($202,000 | ) |   |         | ($1,523,000 | )        
|Three Months Ended October 31, 2001 |                                 |                                 |         |           |          |          |       |            |           |       |   |           |   |   |        
|Segment revenue                     |                                 | $                               | 152,000 |           |          | $        | 1,000 |            |           |       |  |           |   | $ | 153,000 |            
|                                    |                                 | Segment operating income/(loss) |         |           | ($70,000 | )        |       |            | ($289,000 | )     |   |           |  |   |         |             | ($359,000 | )

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

|                                                                            |  |                            |             |               |  |  |           |  
|--------------------------------------------------------------------------- |  | -------------------------- | ----------- | ------------- |  |  | --------- | -
|                                                                            |  | FOR THE THREE MONTHS ENDED
|                                                                            |  |                           
|                                                                            |  | OCT. 31, 2002              |             | OCT. 31, 2001
|                                                                            |  |                            |             |              
|Total segment operating (loss)                                              |  |                            | ($1,523,000 | )             |  |  | ($359,000 | )
|Amortization of intangible assets                                           |  |                            | 60,000      |               |  |  | 60,000    |  
|Stock appreciation rights (income)/expense                                  |  |                            |            |               |  |  | (275,000  | )
|Interest income                                                             |  |                            | (3,000      | )             |  |  | (3,000    | )
|Corporate expenses incurred related to
the change in control of the Company |  |                            |            |               |  |  | 82,000    |  
|                                                                            |  |                            |             |               |  |  |           |  
|Net loss before income taxes                                                |  |                            | ($1,580,000 | )             |  |  | ($223,000 | )
|                                                                            |  |                            |             |               |  |  |           |  

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Note D  Burly Bear Acquisition

On August 30, 2002, the Company, through its wholly owned subsidiary National
Lampoon Networks, Inc (NLNI), entered into an agreement to purchase
substantially all the assets, mainly consisting of the film library and
production costs of Burly Bear Networks, Inc. (Burly Bear), a privately owned
entity, to enhance it business operations.. Consideration exchanged in the
acquisition consisted of $200,000 in cash, less certain transaction expenses;
shares of the Companys common stock having an aggregate market value of
$400,000 on the effective date; and 150 shares of NLNI Common Stock,
representing fifteen percent of NLNIs issued and outstanding shares of Common
Stock at the same value per share. The purchase price allocation reflects
managements estimates at the date of acquisition. Management has not
established a final allocation of the purchase price, when the final allocation
is established adjustments will be made pursuant to SFAS 141.

The aggregate purchase price was $600,000 consisting of $200,000 cash and
common stock valued at $400,000. The following summarizes the estimated fair
values of the assets acquired:

|                                                         |  |   |         |  
|-------------------------------------------------------- |  | - | ------- | -
|Personal property                                        |  | $ | 58,000  |  
|Film library                                             |  |   | 100,000 |  
|Intangible assets (to be finalized based
upon appraisal) |  |   | 541,000 |  
|Minority Interest                                        |  |   | (99,000 | )
|                                                         |  |   |         |  
|                                                         |  | $ | 600,000 |  
|                                                         |  |   |         |  

Operating result have been included
from August 30, 2002. Pro forma financial
information as if the acquisition had taken place at the beginning of the
reporting period have not been presented. Burly Bear did not have significant
operations during August 2002. so the amounts would not materially differ from
the first quarter operating results.

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

Recent Developments

Effective on September 3, 2002, National Lampoon Networks, Inc., a Delaware
corporation (NLNI) a newly formed subsidiary of the Companys, acquired
substantially all of the assets of Burly Bear Network, Inc., a Delaware
corporation (Burly Bear). Burly Bear, organized by a group including the
executive producer of Saturday Night Live, was in the business of producing and
distributing entertainment through a network of affiliated college television
outlets.

The Asset Purchase Agreement provided that Burly Bear was to receive as
consideration for the purchase of the assets the following: $200,000 in cash,
less certain transaction expenses; shares of our Common Stock having an
aggregate value of $400,000 (resulting in the issuance of 73,801 shares of
Common Stock); and 150 shares of NLNI Common Stock, valued at $99,000 and
representing fifteen percent of NLNIs issued and outstanding shares of Common
Stock. The Company allocated $58,000 of the purchase price to fixed assets,
$100,000 to capitalized production costs or film library, and approximately
$502,000 to intangible assets, which represents the tradename Burly Bear and
its network relationships. The purchase price allocation is not final because
the Company is waiting for final appraisals of the fixed assets and film
library.

Results of Operations

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

For the quarter ended October 31, 2002 trademark revenues were $72,274
compared to $151,947 for the quarter ended October 31, 2001, representing a
decrease of 52%. This decrease resulted primarily from the receipt in the
prior year of $115,000 for royalties for the feature film Animal House. In
fiscal 2003, the Animal House royalty payment should be received in the
second fiscal quarter instead of the first fiscal quarter. Book royalties of
$27,891 in fiscal 2003 represent an increase of $20,173 from fiscal 2002 book
royalties of $7,808. $25,000 was received in fiscal 2003 as the initial
payment for the use of the National Lampoon name by a company involved in
gaming. Television royalties received during fiscal 2003 were $19,167 versus
$25,782 received during the first fiscal quarter of 2002, representing a
decrease of 26%. First quarter fiscal 2003 Internet revenues of $1,867
increased by 273% over fiscal 2002 Internet revenues of $501. Increased
merchandise sales accounted for this change.

Costs related to trademark revenue for the quarter ended October 31, 2002
decreased to $5,432 from $7,072 during fiscal 2002 primarily due to reduced
third party royalties associated with certain trademark revenues. Costs
related to Internet operations (excluding selling, general and administrative
expenses related to internet operations) were $9,537 during the quarter ended
October 31, 2002 versus $7,193 during the quarter ended October 31, 2001,
representing an increase of 33%. This increase in Internet costs were related
to the increase in merchandise and web site writing costs. Production costs
of $163,639 for the quarter ended October 31, 2002 included two direct response
commercials, which cost $82,500, and National Lampoon Networks production of
television programs totaling $81,139 for the quarter. There were no
production costs in the October 31, 2001 fiscal quarter.

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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 October 31, 2002 and 2002. Selling, general and administrative costs
increased by $244,717 or 42% to $823,834 during the quarter ended October 31,
2002 versus $579,117 during the same period last year. This increase resulted
primarily from,  i) salary increases of $216,527 to $348,426 from $131,899 in
fiscal 2002, along with approximately $66,000 in increased overhead costs like
travel, telephone, office supplies, insurance and other costs in fiscal 2002
due to the significant hiring of personnel and consultants, and the increased
overall activity of the Company since the NLAG Transaction of
May 17, 2002,  ii) the addition of National Lampoon Networks, which had selling, general, and
administrative costs of $167,416,  iii) overall the Companys legal, proxy
solicitation, accounting, and corporate costs decreased by $204,822 or 58% to
$151,371 for the quarter from $356,193, in the prior years first fiscal
quarter, due to the agreement consummated by the May 17, 2002 NLAG Transaction.

During the quarter ended October 31, 2001, the Company recorded a benefit
of $(275,526) related to stock appreciation rights (SARs) granted to the
Companys chief executive officer. All SARs were converted to stock options in
the prior fiscal year, and so there was no comparable benefit in the current
quarter.

Minority interest in loss of consolidated subsidiary of $37,283 for the
quarter ended October 31, 2002 represents a credit against 15% of the loss of
the wholly owned subsidiary, National Lampoon Networks (NLN), due to a third
party owning a 15% interest in NLN. The Company did not have any comparable
income or expense in the prior fiscal year. Interest income during the quarter
ended October 31, 2002 decreased to $2,698 versus $2,997 during the quarter
ended October 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 October 31, 2002, the Company had a net loss of
$1,580,283 or $1.10 per share versus a loss of $222,861, or $0.16 per share
for the quarter ended October 31, 2001. This increase in the loss resulted
primarily from significantly increased personnel and related costs associated
with the increase in activity since the NLAG Transaction, as well as no SAR
benefit during the current fiscal year.

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Liquidity and Capital Resources

The Companys principal source of working capital during the quarter ended
October 31, 2002 was trademark income and proceeds from Series B preferred
stock issuance. The Companys management believes that continued purchases of
Series B preferred stock along with trademark and television revenues will fund
its ongoing operations for at least the next twelve months.

For the three months ended October 31, 2002, the Companys net cash flow
used in its operating activities was $1,148,794 versus $57,633 of net cash flow
provided by operating activities during the three months ended October 31,
2001. This decrease results primarily from and increase in personnel and other
costs as part of the increase in activities since the NLAG Transaction. At
October 31, 2002, the Company had cash and cash equivalents of $103,709 as
compared to $1,024,207 at July 31, 2002.

Since the completion of the Reorganization Transactions, our operations have
been characterized by ongoing capital shortages caused by expenditures in
initiating several new business ventures. We are also actively seeking private
sources of financing, establishing bank lines and obtaining additional equity
from third party sources. There is no assurance that such financing will be
available on commercially acceptable terms, if at all. We are not certain if
our existing capital resources are sufficient to fund our activities for the
next six to twelve months. Unless our revenues from new business activities
significantly increase during that period, 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 December 15, 2002, we had cash on hand of $21,849, and no
significant receivables. This amount is not sufficient to fund current
operations, which we estimate to be approximately $480,000 per month. We
anticipate that any shortfall will be covered by the additional exercise of the
Series B Warrants held by the NLAG Group or other investments by NLAG. 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, 2002 contain an explanatory paragraph as to our ability to continue as
a going concern. This qualification may impact our ability to obtain future
financing.

Future Commitments

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.

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PART II  OTHER INFORMATION




Item 1  Legal Proceedings

None




Item 6  Exhibits and Reports on Form 10-K




PART IV.




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A) EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K)

|      |  |  |  |                                                                                                                                    
|----- |  |  |  | -----------------------------------------------------------------------------------------------------------------------------------
|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                                                                       
|      |  |  |  |                                                                                                                                    

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|      |  |  |  |                                                                                                           
|----- |  |  |  | ----------------------------------------------------------------------------------------------------------
|      |  |  |  |                                                                                                           
|      |  |  |  | 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)                                         
|      |  |  |  |                                                                                                           
|11    |  |  |  | Statement re: computation of Per Share Earnings                                                           
|      |  |  |  |                                                                                                           
|12    |  |  |  | Statement re: computation of Ratios                                                                       
|      |  |  |  |                                                                                                           
|27    |  |  |  | Financial Data Schedule (7)                                                                               
|      |  |  |  |                                                                                                           
|99.1  |  |  |  | Certification pursuant to Section 906 of Sarbanes-Oxley                                                   



---

|(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) |  | Filed herewith                                                                                                                   
|   
|(7) |  | Filed electronically herewith with
the Securities and Exchange Commission, omitted in copies distributed to shareholders or other

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| |  | persons.
| |  | --------

(b) Forms 8-K

Registrants Current Report on Form 8-K filed on August 2, 2001.

Registrants Current Report on Form 8-KA filed on November 18, 2002.

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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: |  | December 14, 2002 |  | J2 COMMUNICATIONS                                   
|      |  |                   |  |                                                     
|      |  |                   |  | By: /s/James Toll
James Toll
Chief Financial Officer

14