U.S. SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549
                                
                                
                           FORM 10-KSB
                                
                                
[X]   Annual  report  pursuant to section  13  or  15(d)  of  the
Securities  Exchange  Act  of 1934  for  the  fiscal  year  ended
December 31, 1998, or

[ ]  Transition report pursuant to section 13 or 15(d)  of  the
Securities  Exchange act of 1934 for the transition  period  from
to


                  Commission File No.  0-23015


                     J-BIRD MUSIC GROUP LTD.
   (Name of Small Business Issuer as specified in its charter)

         Pennsylvania                       06-1411727
(State or Other Jurisdiction of           (IRS Employer
Incorporation or Organization)         Identification No.)

          396 Danbury Road, Wilton, Connecticut  06897
      (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (203) 761-9393

Securities registered under Section 12(b) of the Act:  None

Securities registered under Section 12(g) of the Act:

                 Common Stock, Par Value $0.001

Check  whether  the issuer (1) filed all reports required  to  be
filed by sections 13 or 15(d) of the Exchange Act during the past
12 months (or such shorter period that the issuer was required to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes [X] No [ ]

Check  if there is no disclosure of delinquent filers in response
to  Item  405  of Regulation S-B in this form, and no  disclosure
will  be  contained,  to the best of registrant's  knowledge,  in
definitive  proxy  or  information  statements  incorporated   by
reference  in  Part III of this Form 10-KSB or any  amendment  to
this Form 10-KSB.  [   ]

The  issuer's revenues (consisting only of interest  income)  for
its most recent fiscal year:  $432,713.

The aggregate market value of voting stock held by non-affiliates
computed  on the basis of the last sale price on April  9,  1999,
was $4,216,123.

As   of   December  31,  1998,  the  Registrant  had  outstanding
14,325,395 shares of Common Stock, par value $0.001.

Documents incorporated by reference:  None.

<PAGE>

                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                     Page

Part I                                                           

1.   Description of Business                                    3

2.   Description of Properties                                  6

3.   Legal Proceedings                                          6

4.   Submission of Matters to a Vote of Security Holders        7
                                                                 
Part II                                                          

5.    Market  for  Common Equity and  Related  Stockholder      7
       Matters

6.    Management's  Discussion and Analysis  of  Financial      7
       Condition and Results of Operations

7.   Financial Statements                                       8

8.   Changes in and Disagreements with Accountants              8
      on Accounting and Financial Disclosure

Part III                                                         

9.   Directors, Executive Officers, Promoters and Control       8
      Persons;  Compliance  with  Section  16(a)  of  the
      Exchange Act

10.  Executive Compensation                                     9

11.  Security Ownership of Certain Beneficial Owners  and     10
      Management

12.  Certain Relationships and Related Transactions            12

13.  Exhibits and Reports on Form 8-K                          12





                FORWARD-LOOKING STATEMENT NOTICE

     When used in this report, the words "may," "will," "expect,"
"anticipate,"  "continue," "estimate," "project,"  "intend,"  and
similar  expressions  are  intended to  identify  forward-looking
statements  within the meaning of Section 27a of  the  Securities
Act  of  1933 and Section 21e of the Securities Exchange  Act  of
1934 regarding events, conditions, and financial trends that  may
affect   the  Company's  future  plans  of  operations,  business
strategy,  operating  results, and financial  position.   Persons
reviewing  this  report  are cautioned that  any  forward-looking
statements  are  not  guarantees of future  performance  and  are
subject  to  risks and uncertainties and that actual results  may
differ  materially from those included within the forward-looking
statements  as  a  result of various factors.  Such  factors  are
discussed  under the headings "Item 1.  Description of Business,"
and  "Item  6.  Management's Discussion and Analysis of Financial
Condition  and  Results of Operations," and also include  general
economic  factors and conditions that may directly or  indirectly
impact   the   Company's  financial  condition  or   results   of
operations.
                                
                             PART I
                                
                ITEM 1.  DESCRIPTION OF BUSINESS

General

     J-Bird  Records, Inc.("J-Bird") is the first World Wide  Web
Recording  Label  TM.   The Company was  officially  launched  on
November 1, 1996 to market, distribute and sell music via  a  new
medium  - the Internet.  At its Website, located at http://www.j-
birdrecords.com, the Company attracts and signs recording artists
through its on-line office and promotes, markets and sells  their
recordings through its on-line record store.

     The Company's Website provides a comprehensive entertainment
and  information  resource enabling users to  search  and  sample
music  and  artist  information interactively through  sound  and
graphics, including on-line "sound stations" for each artist  and
the  J-Bird  on-line "radio station".  When  an  artist  signs  a
recording  contract  with the Company,  such  artist's  music  is
posted  on  the  Company's Website in digital form for  streaming
either  Real  Audio  TM  or Windows Media  Player.   The  Website
contains a webpage for each of the Company's artists.  Users  who
are  interested  in  the  music  they  sample  may  purchase   it
immediately  on-line.   Users  can  also  obtain  information  on
specific  artists  and related concert tours,  music  events  and
other  promotions and read recent articles on the favorite J-Bird
artists.   J-Bird designs, produces and distributes CD's  on-line
and   in  the  traditional  retail  chains  around  the  country.
Artists,  either new or established, who want more  control  over
the  production  and  distribution of  their  music,  select  and
contract with J-Bird.  J-Bird and the artists then share  in  the
proceeds of the CD sales.  By giving tens of millions of Internet
users  worldwide  access to the music of  these  artists,  J-Bird
fills  a  niche  not  addressed  by  radio,  music  videos,   and
traditional music retailers.

     Each  new artist who executes a Recording Contract  with  J-
Bird  is required to produce one compilation of music for  J-Bird
during  the  three-year term of the contract.   Pursuant  to  the
Recording   Contract,  J-Bird  has  the  exclusive   rights,   in
perpetuity,  to manufacture, advertise, sell and distribute  such
compilation.  In return, the artist receives a 12% royalty on the
sales of all CDs produced.  If the artist enters into a recording
contract with another record label during the three-year term, J-
Bird  will  receive a royalty of 2% of all sales  for  the  first
album  produced  by  the artist with the new record  label.   The
contract further requires the artist to purchase either  250  CDs
for  $1,000 or 1,000 CDs for $2,250, which the artist is entitled
to  sell for $10 each.  J-Bird currently has 230 artists  in  its
catalogue.

     J-Bird  has  chosen  the Internet as its  primary  marketing
vehicle  because  the  Internet provides  a  low-cost  method  of
providing, displaying and selling different styles and genres  of
music  to a worldwide audience.  The Internet also allows  J-Bird
to target sales to the largest music-buying population, the 15 to
24  age group, which also represents the highest concentration of
Internet users.  J-Bird's Website offers content-rich music genre
sites  for  rock,  pop, alternative, country, urban,  rap,  jazz,
gospel,  classical  and world music, through the  combination  of
audio,  graphics, and text.  J-Bird's genre and artist web  pages
allow  users  to target music and information based  on  personal
interests.   J-Bird  believes  that  this  approach  provides   a
stimulating   and   entertaining   on-line   environment    which
establishes  a  community atmosphere and promotes consumer-driven
product sales.  J-Bird believes that the Company's business  will
greatly benefit from the growth of the Internet.

     The  Company  believes that on-line sales of recorded  music
will  compliment the traditional retail channel and  will  expand
overall  music sales because of the on-line medium's  ability  to
capitalize on the ongoing shift in demographics of music  buyers;
to reach a growing international consumer market and to offer the
consumer  easier access to a broad range of titles.  J-Bird  also
believes  that  the ability to gather and process data  resulting
from  customer  purchases  and  usage  will  facilitate  targeted
promotional  efforts  in  the  highly  segmented  recorded  music
market.   The  Internet  also provides  access  to  international
markets for recorded music which are growing faster than the U.S.
market.

     In addition, the Company gathers important information about
demographics and consumer preferences from users of its  Website.
This   information  permits  the  Company  to  target  subsequent
promotions  to  a  particular customer group or geographic  area.
The  Company believes that this practice will enable the  Company
to  market its artists in an efficient, cost-effective manner  by
targeting the most likely buyers for such artists music.  In  the
future,  the  Company expects to promote its artists through  the
use  of  its  radio station and on-line "chat-rooms" intended  to
spark  interest  in  a  particular music genre  or  artist.   The
Company  believes that its strategy of interactive sales  on  the
Internet  combined  with targeted promotions will  enable  it  to
build a loyal customer base.

     Traditional   record   companies   typically   incur    high
promotional  and other costs in the distribution of their  music,
providing a strong disincentive to sign unproven bands.  J-Bird's
low-cost approach of relying upon listeners' interests will allow
the  Company  to  compete on a cost-effective  basis  with  other
record  companies.   The  Company  feels  that  the  use  of  its
interactive Website, its on-line radio station, and its  targeted
advertising, promotion and distribution, creates a new medium for
the  music  industry  that  permits  it  to  reach  music  buyers
throughout the world and that has the potential to shift the  way
music is marketed to consumers.

      In  May 1998, the Company entered into a Download Agreement
with  AT&T Corp.  Under the agreement the Company granted AT&T  a
license to use tracks of music produced by artists under contract
with  the  Company,  encode  the tracks  for  delivery  over  the
internet  using AT&T's "a2b" media player, and promote the  music
tracks  on  AT&T's a2b music website.  AT&T also  made  available
through  the Company's website the a2b media player for consumers
to  download so that they could retrieve and play encoded tracks.
Consumers  are charged an average price of $1.99 for  each  track
retrieved,  which  is paid by credit card  to  AT&T.   Under  the
Agreement, AT&T is entitled to retain the first $2,000 from music
track purchases, and all subsequent purchases are divided equally
between the Company and AT&T.

      In February 1999, the Company entered into a Web Events and
Windows  Media  Technology  Promotion  Agreement  with  Microsoft
Corporation.   Under this Agreement, the Company is  entitled  to
promote  and make available the Windows Media Player through  its
website  and  distribute music tracks formatted for  the  Windows
Media   Player.   Microsoft  will  make  available  through   its
"webevents"  website a site link to the Company's website  and  a
content summary of the music products available at the Company.

     In   November  1997,  J-Bird  was  approached   by   Navarre
Corporation   ("Navarre")   with  respect   to   a   distribution
arrangement.   J-Bird entered into a three-year exclusive  retail
distribution Agreement with Navarre.  Navarre, one of the leading
independent  distributors  of  music  and  interactive  software,
distributes to retail accounts throughout the nation,  including,
Tower  Records, The Musicland Group (which includes  Media  Play,
Sam   Goody,  Musicland  and  On-Cue),  Blockbuster,  Best   Buy,
Wherehouse, Camelot, HMV, Borders and Circuit City as well as all
the  leading One Stops.  Under the Agreement, Navarre distributes
J-Bird   products  nationally  through  its  retail  distribution
relationships,  and  the Company receives a  percentage  of  each
product sold.

History

      On  October  7,  1997,  the Company entered  into  a  Stock
Purchase Agreement with the shareholders of J-Bird Records, Inc.,
to  acquire  their  shares  of  J-Bird  Records,  Inc.,  for  the
equivalent number of shares of the Company.  The total number  of
shares  exchanged in this transaction was 4,480,000.  On  October
8, 1997, the Company changed its name to J-Bird Music Group LTD.

     On  April  22,  1997,  the Company entered  into  an  Option
Agreement with Feild Technologies,LLC ("FTL"), a company based in
Bangor, Maine.  Under this agreement, the Company assigned  seven
domestic and foreign valve patents held by the Company to FTL for
a  5% equity position in FTL.  In the event the Company does  not
receive  distributions of at least $100,000 on or before December
31,  2000, it shall be entitled to increase its interest  in  FTL
from 5% to 10%, and the other members' interests in FTL shall  be
reduced on a basis proportionate to their relative interests.
     
     On  May 3, 1996, the Company entered into an agreement  with
Rhode   Island   Renal  Institute  ("RIRI")  and  Brooks   Porter
("Porter").   RIRI  and  Porter entered into  a  Development  and
Investment  Agreement ("D&I Agreement") and pursuant to  the  D&I
Agreement,  RIRI  agreed to provide financial  support,  clinical
testing   facilities  and  supplies  to  Porter  to  assist   his
development  of  the Renal Ozone Sterilization  System  ("ROSS").
Under the agreement with the Company, RIRI and Porter assigned to
the Company the right to manufacture and distribute ROSS, and any
other interests or rights created by the D&I Agreement between or
among  Porter and RIRI.  In accordance with the agreement between
the  Company and RIRI, RIRI received 125,000 shares of restricted
common  stock  of  the  Company.   In  December  1997,  the  ROSS
Corporation  agreed  to buy the Company's interest  in  the  ROSS
project  for  $500,000  represented  by  a  promissory  note  due
December  10,  1998.   In connection with  this  transaction  the
Company  recognized a loss of $1,810,000.  In November 1998,  the
Company  settled  the  $500,000  payment  obligation  from   ROSS
Corporation  in  exchange  for the  return  to  the  Company  for
cancellation of 125,000 shares of the Company's common stock.

     On June 14, 1996, the Company entered into an agreement with
a  company called Applied Advanced Technologies, Inc. ("AAT") and
an individual named Tovi Avnery ("Avnery"), owners of an electron
beam  technology.  Under this agreement, the Company advanced  to
AAT a total of $350,000.  In return, the Company received 114,546
shares of common stock of AAT, representing 45% ownership in  the
company.   Avnery  also  received 130,000  shares  of  restricted
common  stock of the Company.  On July 15, 1997, the Company  and
AAT  entered  into a Memorandum of Understanding.  In  accordance
with  this  Memorandum of Understanding, AAT was to  pay  to  the
Company  $350,000 plus interest, not to exceed $500,000, by  July
31, 1999.  In September, 1997, the Company executed a Release and
Assignment  of  Interest in AAT, to be held in escrow  until  the
amount  owed to the Company was paid in full.  In May  1998,  the
Company  and AAT settled the outstanding balance due the  Company
for  $205,000  in cash and the return of 130,000  shares  of  the
Company's common stock by Avnery, and the Company transferred all
of its equity interest in AAT to Avnery.

Governmental Regulation

      There is no material government regulation of the Company's
business.

Competition

       The  Company  competes  for  artists  and  recordings   to
distribute  with national and regional recording and distributing
companies,  which  have a competitive edge over  the  Company  by
virtue  of  their stronger management, promotional, and financial
resources.   The  Company's strategy is to sign artists  who  are
unable  to  obtain  recording  contracts  with  larger  recording
companies  and  acquire distributing rights  to  recordings  that
management  believes  will  appeal  to  consumers  interested  in
particular music genres.  The recording products offered  by  the
Company compete for consumers who have a wide selection of  music
choices within the same music genres offered by the Company.  The
Company  also competes with other businesses that offer and  sell
recordings  through the Internet.  The Company will  compete  for
consumer  dollars on the basis of the types of music  it  selects
for  distribution  and  the marketing  of  its  music  selections
through the Internet.

Employees

      The  Company  has 5 employees, consisting of  3  management
employees and 2 marketing and office employees.
               ITEM 2.  DESCRIPTION OF PROPERTIES

      The  Company's  principal place of business  is  an  office
located  at  396  Danbury Road, Wilton, Connecticut  06897.   The
office facility consists of approximately 1800 square feet and is
being  leased  pursuant to a thirty-six month lease  expiring  in
July, 2000 for a monthly lease payment of $2638.

                   ITEM 3.  LEGAL PROCEEDINGS

      The Company is not a party to any legal proceedings, and to
the  best of its knowledge, no such proceedings by or against the
Company have been threatened.

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

     No matter was submitted to a vote of security holders in the
fourth quarter of 1998.

                            PART III

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The  following table sets forth for the respective  periods
indicated  the prices of the Company's Common Stock in the  over-
the-counter  market,  as  reported  and  summarized  by  the  OTC
Bulletin  Board.  Such prices are based on inter-dealer  bid  and
asked   prices,   without  markup,  markdown,   commissions,   or
adjustments and may not represent actual transactions.

Calendar Quarter Ended     High Bid               Low Bid

March 31, 1997               $7.75                  $1.25
June 30, 1997                $3.25                 $0.5313
September 30, 1997           $2.00                 $0.5313
December 31, 1997            $1.875                $0.4063
                                                      
March 31, 1998               $0.75                 $0.3125
June 30, 1998                $1.75                $0.28125
September 30, 1998          $1.59375               $0.5625
December 31, 1998            $1.25                 $0.5313

There  are approximately 153 shareholders of record, which figure
does   not  take  into  consideration  those  shareholders  whose
certificates are held in the name of broker-dealers.

As  of the date hereof, the Company has not paid or declared  any
cash  dividends.  The Company can give no assurance that it  will
generate  future earnings from which cash dividends can be  paid.
Management  has  followed the policy of  retaining  any  and  all
earnings  to  finance the development of the  business.   Such  a
policy is likely to be maintained as long as necessary to provide
working capital for the Company's operations.

   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                            CONDITION
                    AND RESULTS OF OPERATIONS

Overview

     The  following discussion and analysis provides  information
that  management  believes  is  relevant  to  an  assessment  and
understanding  the Company's consolidated results  of  operations
and financial condition for the years ended December 31, 1998 and
1997.   The  discussion  should be read in conjunction  with  the
Company's  consolidated  financial  statements  and  accompanying
notes.

     The  Company  derives  its  revenues  from  three  principle
sources:   (i)  sales of compact disks ("CDs")  directly  to  the
artists  for resale to consumers; (ii) CD sales on the  Company's
website; and (iii) retail CD sales.

     The  Company's strategy to develop products and services for
the  music  entertainment business was primarily responsible  for
its net loss for the years ended December 31, 1998 and 1997.  The
Company  has  only a limited operating history in its  operations
upon  which  an  evaluation of J-Bird and its  prospects  can  be
based.  Accordingly,  J-Bird believes that  the  results  of  its
operations in the past, during which time the Company had minimal
revenues,  are not meaningful indications of future  performance.
The  Company  incurred  losses  from  continuing  operations  of,
$3,756,724 and $1,929,865 for the years ended December  31,  1998
and 1997.

      In  1997  the Company signed a distribution agreement  with
Navarre  Corporation which provides the Company with  a  national
presence    in    approximately   52,000    traditional    retail
establishments.  This agreement also provides the Company with  a
national  sales  force that has existing relationships  with  the
major  retail  outlets in the country.  As a start-up  entity  in
1997  the  Company sold directly to retail markets  with  minimal
results.   In  the second half of 1997 the Company  was  able  to
obtain  two  distribution agreements with regional  distributors.
This  enabled  the Company to establish a regional  presence  and
provided  credentials that assisted in signing  the  distribution
agreement with Navarre Corporation.

     The  Company currently intends to increase substantially its
operating  expenses  to (a) fund increased sales  and  marketing,
enhance   its   existing  website,  and  to  complete   strategic
relationships  important to the success of the Company.   To  the
extent  that  such  expenses  precede  or  are  not  subsequently
followed  by increased revenues, the Company's business,  results
of   operations,  and  financial  condition  will  be  materially
adversely  affected.  There can be no assurance that the  Company
will  be  able to generate sufficient revenues from the  sale  of
music   recordings,   related   merchandise,   advertising,   and
sponsorship  programs to achieve or maintain profitability  on  a
quarterly  or  annual basis in the future.  The  Company  expects
negative   cash  flow  from  operations  to  continue   for   the
foreseeable  future  as it continues to develop  and  market  its
business.

Liquidity and Capital Resources

       The  Company  has  financed  its  operations  and  capital
expenditures  primarily  from equity  financing  and  loans  from
shareholders.  At December 1998, the Company had a  cash  balance
of  $2,205.  In 1998 the Company received $775,000 in  cash  from
the  sale  of stock through subscription agreements and collected
$119,750  of  the  stock  subscriptions outstanding  at  December
31,1997.   The amount due under stock subscriptions  at  December
31,  1998  was $250,000.  In 1998 the Company collected  $205,000
from a $ 350,000 note receivable that was outstanding at December
31,1998.   The Company expects negative cash flow from operations
to  continue  for  the foreseeable future,  as  it  continues  to
develop  and  market its operations.  Inflation has not  had  any
material  impact  on the Company's operations.   The  Company  is
presently  funding  its  operating  deficit  through   a   credit
agreement  with  IMM  International Inc.  a  shareholder  of  the
company.   The Company had borrowed $113,560 under this agreement
as  of  December  31,1998  and borrowed  an  additional  $191,000
subsequent to December 31,1998.

     The  Company  is currently pursuing long term financing  for
its operating activities.  No source of financing has occurred to
date  and  there  can  be  no assurance that  financing  will  be
available, or if available, that it will be on acceptable  terms.
The  ability  to finance existing and future operations  will  be
dependent upon external sources.

     In  January  1999  the Company obtained a $100,000  line  of
credit with a commercial bank.  The line of credit bears interest
at  2%  above  the  bank's  prime  rate.   Certain  officers  and
shareholders  have personally guaranteed the debt.   The  Company
has  borrowed  $100,000 as of March 31,1999  under  the  line  of
credit.

Results of Operations- year ended December 31, 1998 compared to
year ended December 31, 1997

A  comparison  of  the 1998 results to the  1997  results  is  as
follows
                                    1998                1997
                             -----------          ----------
Net Sales                       $432,713            $145,248
------------
Cost of Sales                   $238,658            $121,958

      Sales increased in 1998 over 1997 primarily as a result  of
the  distribution agreement with Navarre.  Sales  also  increased
due  to  the increased number of artists and bands signed by  the
Company  in  1998,  including a nationally recognized  performer.
This  artist  accounted for approximately $240,000  of  sales  in
1998.

     The Company has 230 artists under agreements at December 31,
1998, compared to 183 at December 31, 1997.

     Cost  of sales in 1998 has increased in accordance with  the
increase  in  sales.  In 1997 cost of sales includes  $31,000  of
costs  that relate to the start up of the Company when  no  sales
took  place.   In addition, approximately $177,000  of  inventory
became obsolete when the Company changed its distribution network
to Navarre.  This was recorded as a separate category in the 1997
financial statements.

                                              1998                1997
                                       -----------         -----------
Advertising and Promotion Expenses        $440,864            $162,377
----------------------------------

      The  increase in advertising and promotion is  due  to  the
higher  level of operations of the Company.  The primary increase
from  1997  to 1998 is due to increased services with advertising
agencies as a result of the growth in the number of artists.

Professional Fees
--------------------                       $92,371            $212,255
 
     The  decrease  in professional fees is due  to  the  reduced
level of legal and consulting fees by approximately $90,000.

Salaries                                  $362,829            $173,225
---------

     The  increase in salaries is due to the increased number  of
employees, six in 1998 compared to three in 1997 of the Company.

Financing Fee-Sale of Discounted Stock  $1,277,500           $ 868,000
--------------------------------------

     Financing  fees  related  to the  non-cash  charge  for  the
purchase  of restricted common stock at a discount to the  market
value of the stock.

Administrative Expenses                  $472,466            $264,329
-----------------------

     The  increase  in  administrative expenses  is  due  to  the
increased  of operations of the Company.  Rent expense  increased
in  1998 by approximately $32,000 compared to 1997.  Printing and
stationary,  equipment  rental, insurance,  postage  and  general
office supplies increased by approximately $100,000.  Travel  and
entertainment increased by approximately $88,000.

Interest Expenses                          $4,260            $ 68,825
-----------------
     
     The  decrease  in interest expenses is due  to  the  $65,000
relating to the value of warrants issued below fair market  value
of  the  stock in connection with a $30,000 working capital  loan
that was recorded as interest expense in 1997.  The 1998 interest
relates to the amounts due on the loan balance in 1998.

                  ITEM 7.  FINANCIAL STATEMENTS

     The financial statements of the Company appear at the end of
this  report beginning with the Index to Financial Statements  on
page F-1.

    ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE

     There have been no changes in or disagreements with
accountants in the past three years.

                            PART III

  ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                            PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors and Officers

The  following  table sets forth the names, ages,  and  positions
with  the Company for each of the directors and officers  of  the
Company.


Name                Age  Positions                       Since

John J. Barbieri    34   President, CEO and Director      1997
                         
Douglas G. McCaskey 43   Chairman and Director            1997

Hope D. Trowbridge  37   Secretary, Treasurer and         1991
                         Director                           

Asa L. Fish         32   Director                         1997

All  executive officers are elected by the Board and hold  office
until  the  next Annual Meeting of stockholders and  until  their
successors are elected and qualify.

The  following is information on the business experience of  each
director and officer.

JOHN  J.  BARBIERI, CEO, President and Director of  the  Company,
earned a B.F.A. Degree from Paier College of Art in 1986.   After
graduating,  Mr.  Barbieri joined Polygram Records  as  a  Senior
Graphics Manager responsible for the print production and graphic
production budgets as well as implementing domestic production on
product.   In  May  1993, Mr. Barbieri joined  Angel  Records,  a
division of EMI Records Group, as Vice President of Creative  and
Production  Services.  Until June 1996, he  was  responsible  for
creative  services  production, operations and  new  technologies
departments.  Involved in creative direction, marketing and label
management,  Mr.  Barbieri has help pioneer the  new  multi-media
technology  for  CD  PLUS and Enhanced CDs.   He  founded  J-Bird
Records, Inc. in July 1996, and serves as its CEO, President  and
Director  as well as serving the same positions for J-Bird  Music
Group LTD as of October 7, 1997.

DOUGLAS  G. McCASKEY, Chairman and Director of the Company.   Mr.
McCaskey is a graduate and MBA candidate of Babson College, where
he  earned a B.S./B.A. degree in Accounting/Finance in 1975.   In
November,  1975 he joined Readers Digest Association as  a  Field
Manager.  In January, 1982 he joined Shearson American Express as
a  Vice  President of Investments.  He went on to  work  as  Vice
President  of  Investments for Oppenheimer & Company  and  Drexel
Burnham  Lambert.   Mr.  McCaskey  has  over  fifteen  years   of
experience  in  the  field  of  investments,  as  a  retail   and
institutional broker as well as a Registered Investment  Advisor.
Mr.  McCaskey  left the securities industry in  1992,  and  since
leaving  has  been  a  principal owner  of  several  real  estate
projects   and  provided  independent  consulting   services   to
businesses  in  the areas of business development and  financing.
From December 1996, to the present Mr. McCaskey has served as the
President  and a Director of Marcorp, Inc., an inactive publicly-
held corporation with no assets.

HOPE  D. TROWBRIDGE: Secretary, Treasurer and Director of  J-Bird
Music  Group  LTD  since June 7, 1991, earned a  B.S.  Degree  in
Business, concentration marketing, from Skidmore College in 1983.
Ms.  Trowbridge was employed as an account executive from  March,
1986   to  November,  1992  at  Drexel  Burnham  Lambert,  Access
Securities,  Minotaur  Securities  and  Harbor  Financial,   Inc.
Registered  Agent (Series 7 and 63) August, 1983.  She  left  the
securities industry in November 1992.  From December 1992, to the
present Ms Trowbridge has served as the Corporate Secretary and a
Director  of Marcorp, Inc., an inactive publicly-held corporation
with  no  assets.   She served as President of the  Company  from
December   1996   to   October  1997,  and   is   currently   the
Secretary/Treasurer and a director and Secretary/Treasurer of the
Company's subsidiary.

ASA L. FISH, has been a director of the Company since April 1997.
He  served  as the Secretary from April 1997 until October  1997,
and  is  presently Vice President and head of Investor  Relations
for  the  Company.   For  five years prior  to  his  joining  the
Company,  he  was a Nutrition Expert and Fitness  Consultant  for
Gold's Gym.

Section 16(a) Filing Compliance

      Section  16(a)  of  the Securities  Exchange  Act  of  1934
requires  officers and Directors of the Company and  persons  who
own  more than ten percent of a registered class of the Company's
equity  securities to file reports of ownership  and  changes  in
their  ownership  on  Forms 3, 4, and 5 with the  Securities  and
Exchange  Commission, and forward copies of such filings  to  the
Company.   The Company believes none of its directors,  officers,
and  beneficial  owners of more than ten percent  of  the  equity
securities of the Company have filed any of the required  reports
since the Company became a reporting company in 1998.

                ITEM 10.  EXECUTIVE COMPENSATION

     In  the  year  ended  December 31,1997 the  chief  executive
officer,  John J. Barbieri received a salary of $31,250 prior  to
the  date  of the acquisition transaction between Caltron,  Inc.,
and J-Bird Records, Inc., in October 1997.  For the remainder  of
1997  he  did not receive a salary.  In 1996 the Company did  not
pay a salary to its chief executive officer.

     For  the  year  ending December 31, 1998, Mr.  Barbieri  was
compensated at the rate of $120,000 per year for his services  as
President, which was deferred and not paid in 1998.  There is  no
employment  agreement with Mr. Barbieri or  any  other  executive
officer of the Company.

     There  were  no  stock options granted or exercised  to  the
executive officers in 1996, 1997 or 1998.

  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                           MANAGEMENT

      The  following table sets forth as of March 19,  1999,  the
number  and percentage of the outstanding shares of common  stock
which, according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of  the  Company, (ii) each executive officer, (iii) all  current
directors  and executive officers of the Company as a  group  and
(iv)  each  person who, to the knowledge of the Company,  is  the
beneficial owner of more than 5% of the outstanding common stock.
Except  as  otherwise indicated, the persons named in  the  table
have sole voting and dispositive power with respect to all shares
beneficially  owned,  subject to community  property  laws  where
applicable.

                                   Common Shares   Percent of Class(2)

John J. Barbieri (1)               2,960,000       20.7
396 Danbury Road
Wilton, CT  06897

IMM International, Inc. (2)        1,300,000       9.1
#2 Springhill Road, Suite 17
Norwalk, CT  06851

Douglas G. McCaskey(1)(3)          681,000         4.8

Hope D. Trowbridge (1)(2)          255,000         1.8

Asa L. Fish (1)                    135,000         0.9

All Executive officers and         5,331,000       37.2
  Directors as a Group (4)

(1)   These  persons  are  all  of  the  executive  officers  and
directors of the Company.

(2)   Hope  D.  Trowbridge  is the sole  officer,  director,  and
shareholder   of  IMM  International,  Inc.   Accordingly,   Miss
Trowbridge has voting and investment control over these shares.

(3)   Includes  430,000  shares held by Mr.  McCaskey  through  a
general  partnership  in  which he is  the  general  partner  and
principal  owner.   Accordingly,  Mr.  McCaskey  has  voting  and
investment control over these shares.

    ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In October 1998 the Company entered into a credit agreement
with IMM International, Inc., ("IMM") a principal stockholder  of
the Company, whereby IMM will provide up to $500,000 in financing
to the Company for working capital purposes.  Hope Trowbridge, an
officer  and  director,  is  the  sole  officer,  director,   and
shareholder  of IMM.  The funding commitment under the  agreement
expired  on  March  31,1999.   Amounts  outstanding  under   this
agreement bear interest at 8% and are due on June 30,  2000.   At
December  31,1998  the Company had borrowed $113,560  under  this
agreement.  Subsequent to December 31, 1998 the Company  borrowed
an additional $191,000.

      In  1998  IMM  purchased 2,000,000 shares of the  Company's
common  stock  for  $525,000.   Other non-affiliate  shareholders
purchased 750,000 shares of stock at prices ranging from $.25  to
$.40  per  share.  The difference between the subscription  price
and the fair market value of the stock of $1,277,500 was recorded
as a non-cash charge to operations.  In 1998, IMM repaid $119,750
of  amounts  outstanding  under stock subscriptions  at  December
31,1997.   At  December 31, 1998, $250,000 in stock subscriptions
receivable  were  outstanding  from  IMM  for  1,000,000   shares
purchased at a discount to market in 1997.

                            ITEM 13.
                EXHIBITS AND REPORTS ON FORM 8-K

      The  following documents are included as exhibits  to  this
report pursuant to Item 601 of Regulation S-B.

Exhibits.

Exhibit   SEC    Title of Document                     Location
 No.      Ref.                                             
          No.
   
  1      (3)(i)  Articles   of   Incorporation,    as  Fm 10-SB
                 amended (1)                           Page E-1
                                                           
  2     (3)(ii)  By-Laws (1)                           Fm 10-SB
                                                       Page E-8
                                                           
  3       (10)   Navarre   Corporation   Distribution  Fm 10-SB
                 Agreement (1)                           E-35
                                                           
  4       (10)   AT&T  Download Agreement  dated  May    This
                 14, 1998                               Filing
                                                       Page E-1
                                                           
  5       (10)   Assignment   Agreement   with   ROSS    This
                 Corporation dated                      Filing
                   December 10, 1997                   Page E-9
                                                           
  6       (10)   Agreement  to  Discharge  Promissory    This
                 Note with ROSS Corporation dated       Filing
                 November 12, 1998                     Page E-11
                 
  7       (10)   Credit     Agreement    with     IMM    This
                 International, Inc.,                   Filing
                 Dated October 1, 1998                 Page E-13
                 
  8       (21)   Subsidiaries of the Registrant          This
                                                        Filing
                                                      Page E-31
                                                           
  9       (27)   Financial Data Schedules (2)            Not
                                                      Applicable

(1)  Exhibit  No.'s  1  and  2 are incorporated  herein  by  this
     reference to the Company's Registration Statement on Form 10-SB
     filed with the Securities and Exchange Commission on December 21,
     1998.

(2)  The  Financial Data Schedule for the year ended December 31,
     1998,  is  presented only in the electronic filing with  the
     Securities and Exchange Commission.

FORM 8-K FILINGS

No reports on Form 8-K were filed in the last calendar quarter of
1998.
                           SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act,
the  registrant caused this report to be signed on its behalf  by
the undersigned thereunto duly authorized.

                                   J-BIRD MUSIC GROUP LTD.

Date:   April  15, 1999           By: /s/ John  J. Barbieri, President

      In  accordance with the Exchange Act, this report has  been
signed  by the following persons on behalf of the registrant  and
in the capacities and on the dates indicated.

Dated: April 15, 1999            /s/ John J. Barbieri, Director
                                 
                                 
Dated: April 15, 1999            /s/ Douglas G. McCaskey, Director
                                 
                                 
Dated: April 15, 1999            /s/ Hope D. Trowbridge, Director
                                 
                                 
Dated: April 15, 1999            /s/ Asa L. Fish, Director
                                 

                     J-BIRD MUSIC GROUP LTD.
                      Financial Statements
                                
                   December 31, 1998 and 1997

                            CONTENTS


Independent Auditors' Report                                  F-2

Balance Sheet                                                 F-3

Statements of Operations                                      F-4

Statements of Stockholders' Equity                            F-5

Statements of Cash Flows                                      F-8

Notes to the Financial Statements                            F-11



                     Schnitzer & Kondub P.C.
                  Certified Public Accountants
                      550 Mamaroneck Avenue
                    Harrison, New York 10528



INDEPENDENT AUDITORS' REPORT

Board  of Directors
J-Bird Music Group LTD.

We  have audited the accompanying balance sheet of J-Bird Music  Group
LTD. as of December 31, 1998 and the related statements of operations,
changes  in stockholders' equity and cash flows for each of the  years
in  the  two  year  period ended December 31, 1998.   These  financial
statements  are  the responsibility of the Company's management.   Our
responsibility is to express an opinion on these financial  statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to  obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on  a
test  basis,  evidence supporting the amounts and disclosures  in  the
financial statements.  An audit also includes assessing the accounting
principles  used  and  significant estimates  made  by  the  Company's
management,  as  well  as evaluating the overall  financial  statement
presentation.   We believe that our audits provide a reasonable  basis
for our opinion.

In  our  opinion, the financial statements referred to  above  present
fairly,  in  all material respects, the financial position  of  J-Bird
Music  Group  LTD.  as of December 31, 1998 and  the  results  of  its
operations and cash flows for each of the years in the two year period
ended   December  31,  1998  in  conformity  with  generally  accepted
accounting principles.

The  accompanying financial statements have been prepared assuming the
Company will continue as a going concern.  As discussed in Note 1.  to
the  financial  statements the Company has suffered  recurring  losses
from  operations  that raise substantial doubt about  its  ability  to
continue  as a going concern.  Management's plans in regard  to  these
matters are also described in Note 1.  The financial statements do not
include  any  adjustments that might result from the outcome  of  this
uncertainty.



Schnitzer & Kondub P.C.
Harrison, New York

April 7,1999


                     J-BIRD MUSIC GROUP LTD.
                          BALANCE SHEET
                        DECEMBER 31, 1998


ASSETS                                                          1998

Cash                                                       $   2,005
Inventory                                                    198,474
Loans receivable, shareholder                                173,500
Recording advances                                            16,589

Total Current Assets                                         390,568

Fixed assets, net                                            128,502
Other assets                                                   7,279

Total Assets                                               $ 526,349

              LIABILITIES AND STOCKHOLDERS' EQUITY

Account payable and accrued expenses                       $ 412,708
Note payable                                                  15,000
Accrued royalties                                             75,806

Total Current Liabilities                                    503,514

Due to IMM International, Inc.                               113,560
Due to shareholders and officers                              30,330

Total Liabilities                                            647,404

Stockholders' Equity(Deficiency)
 Common stock $.001 par value 25,000,000 shares
 authorized, 14,325,395  issued and outstanding               14,325
Stock subscriptions receivable                              (250,000)
Paid in capital                                            6,161,186
Deficit                                                   (6,046,566)

                                                            (121,055)

Total Liabilities and Deficit                             $  526,349



See accompanying notes to financial statements


                     J-BIRD MUSIC GROUP LTD.
                    STATEMENTS OF OPERATIONS
             YEARS ENDED DECEMBER 31, 1998 AND 1997



                                                1998           1997


Net sales                              $     432,713 $      145,248

Cost of sales                                238,658        121,958

                                             194,055         23,290
Operating expenses:
Advertising and promotion                    440,864        162,377
Professional fees                             92,371        212,255
Amortization and depreciation                 40,489         27,092
Salaries                                     362,829        173,225
Interest                                       4,260         68,825
Selling, general and administrative expenses 472,466        264,329

                                           1,413,279        908,103

Net (loss) before other  (expenses)       (1,219,224)      (884,813)

Other income (expense):
Loss from disposition of assets             (673,000)            -0-
Investment advisory fees                    (595,000)            -0-
Write down of inventory                          -0-       (177,052)
Financing fee- sale of discounted 
  common stock                            (1,277,500)      (868,000)
                                          (2,545,500)    (1,045,052)

Net loss                                 $(3,764,724)   $(1,929,865)

Net loss per common share (basic 
  and diluted)                           $     (0.29)   $     (0.35)

Weighted average common shares 
  outstanding                             13,002,670      5,497,341








See accompanying notes to financial statements

                     J-BIRD MUSIC GROUP LTD.
                    STATEMENTS OF CASH FLOWS
             YEARS ENDED DECEMBER 31, 1998 AND 1997

Cash flows from (used in) operating activities
Adjustments to reconcile net (loss) to net cash
from (used in) operating activities:                 1998                 1997

Net (loss)                                   $  (3,764,724)      $  (1,929,865)
Loss on sale of assets                             673,000                  -0-
Amortization and depreciation                       40,489              27,092
Financing fee- sale of common stock at discount  1,277,500             868,000
Decrease (Increase) in accounts receivable          10,095              (8,143)
(Increase) in inventory                           (144,708)             (5,501)
Stock issued for services                          718,945              78,300
Decrease (increase) in recording advances            5,076             (21,665)
Decrease (increase) other assets                    (5,120)                 -0-
Compensation expense (non cash)                    120,000              88,750
Interest expense (non cash)                             -0-             65,000
Collection of note receivable                      205,000                  -0-
Notes payable                                           -0-             40,000
Increase in accrued royalties                       58,406              17,400
Increase in accounts payable                        51,292             199,526
Net cash (used in) operating activities           (754,749)           (581,106)

Cash flows from (used in) investing activities
Cash acquired in merger                                 -0-              2,448
Purchase of fixed assets                           (37,506)            (60,936)
Net cash (used in) investing activities            (37,506)            (58,488)

Cash flows from (used in) financing activities
Stock issued for cash                              775,000             553,820
Payment of stock subscription                      119,750                  -0-
Due from officer and shareholder                  (138,500)             13,719
Due to shareholders and officers                      (550)                380
Payments of notes payable                          (75,000)                 -0-
Proceeds from notes payable                             -0-             50,000
Due to IMM International Inc.                      113,560                  -0-
Net cash from financing activities                 794,260             617,919

Net increase (decrease) in cash                      2,005             (21,675)

Cash, beginning of year                                 -0-             21,675
Cash, end of year                                $   2,005           $      -0-

Supplemental cash flow information:
Cash paid for interest                           $   4,600           $      -0-

See accompanying notes to financial statements


                        J-BIRD MUSIC GROUP LTD.
            STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
               YEARS ENDED DECEMBER 31, 1998 AND 1997
                                                                      
                             Common            Retained                   
                    Common   Stock   Paid-in   Earnings  Subscription 
                    Shares   Amount  Capital  (Deficit)   Receivable    Total
                                                                          
BALANCE AT
January 1, 1997  4,000,000  $4,000  $429,000  $(351,977)   $      -   $ 81,123
                                                                          
Net loss                 -       -         - (1,929,865)          - (1,929,865)
Stock                                  
 subscription   
 receivable      1,629,000   1,629    368,121              (369,750)         -
Financing fee-
 sale of
 discounted
 common stock            -       -    868,000         -           -    868,000
Issuance of
 stock warrant
 for note payable        -       -     65,000         -           -     65,000
Fair value of
 employment
 services-non                                                      
 Compensated             -       -     88,750         -           -     88,750
Merger of J-Bird               
 Music Group LTD 4,202,325   4,202    823,264         -           -    827,466
Stock issued      
 for cash        1,074,570   1,074    552,746         -           -    553,820
Stock issued                  
 for services       80,000      80     78,220         -           -     78,300

BALANCE AT
 DECEMBER 31,               
 1997           10,985,895  10,985  3,273,201 (2,281,842)  (369,750)   632,594

Net loss                 -       -          - (3,764,724)         - (3,764,724)
Payment of
 stock
 subscription            -       -          -          -    119,750    119,750-
Financing fee-
 sale of
 discounted
 common stock            -       -  1,277,500          -          -  1,277,500
Shares cancelled  (125,000)   (125)         -          -          -       (125)
                                                                          
Fair value of
 employment
 services-non     
 compensated             -       -    120,000          -          -    120,000
Merger shares        5,000       5          -          -          -          5
Stock issued for  
 cash            2,750,000   2,750    772,250          -          -    775,000
Stock issued for   
 services          709,500     710    718,235          -          -    718,945

BALANCE AT
 DECEMBER 31, 
 1998           14,325,395 $14,325 $6,161,186 $(6,046,566) $(250,000) $(121,055)



See accompanying notes to financial statements
                    J- Bird Music Group LTD.
           Notes to Consolidated Financial Statements
             Years Ended December  31, 1998 and 1997

Note 1.  Organization and Significant Accounting Policies

On  October  7,  1997,  Caltron, Inc. entered into  a  stock  purchase
agreement   with   the  shareholders  of  J-Bird  Records,   Inc.   to
purchase  their  shares  of J-Bird Records, Inc.  for  the  equivalent
number  of  shares  of  the  Company.  The  total  number  of  Caltron
common  shares   issued  to  J-Bird  Records,  Inc.  shareholders   in
this  transaction  was  4,480,000 and  was  valued  at  $827,466,  the
net  assets  of  Caltron  at  date  of  acquisition.   The  number  of
shares   issued  represents  approximately  107%  of  the  outstanding
Caltron  shares  at  October  7, 1997. The 4,000,000  shares  received
by   the   founding   shareholders  of   J-Bird   Records,   Inc.   in
connection  with  the  transaction  have  been  shown  as  outstanding
since  the  inception  of  J-Bird Records, Inc.  This  transaction  is
in    substance    a   capital   transaction,   accompanied    by    a
recapitalization  and  has been accounted  for  as  a  reverse  merger
with   J-Bird   Records,   Inc.  being  the  acquiring   company   for
accounting  purposes.  Caltron, Inc.  is  the  acquiring  company  for
legal  purposes.  The  financial  statements  include  the  operations
of  Caltron,  Inc.  since October 7, 1997, date  of  acquisition.   No
goodwill  was  recorded  in  this  transaction.  On  October  8,  1997
Caltron   changed   its   name  to  J-Bird  Music   Group   LTD   (the
"Company").  J-Bird  Records, Inc. is a  wholly  owned  subsidiary  of
J-Bird Music Group LTD.

J-Bird  Records,  Inc.  is the first World Wide  Web  Recording  Label
(TM).   The  Company was officially launched on November  1,  1996  to
market,   distribute  and  sell  music  via  a  new   medium   -   the
Internet.      At    its    Website,    located    at    http://www.j-
birdrecords.com,  the  Company attracts and  signs  recording  artists
through  its  on-line  office and promotes, markets  and  sells  their
recordings through its on-line record store.

The  Company  has  experienced operating losses  since  its  inception
and  has  experienced  significant cash flow  problems.   The  Company
is  in  the  process  of raising capital through  various  sources  to
fund   its   operations   and   has  implemented   certain   operating
strategies to obtain profitably.

Amounts  shown  in  the  consolidated  financial  statements    differ
from  those  previously reported to shareholders due  to  :  a  change
in   the   accounting  for  the  merger  between  Caltron  and  J-Bird
Records   Inc.   with   J-Bird  Records  Inc.  being   the   acquiring
company,    recording   the   estimated   fair   value   of    officer
compensation  at  no  cost  to the Company   and  accounting  for  the
issuance  of  stock in certain subscription agreements  at  less  than
the  fair  market  value  of  the stock . A  reconciliation  of  sales
and net income is as follows:
                                         1997           1996
Sales:
Sales as previously reported    $      13,226    $        -0-
Adjustments                           132,022          6,376

Restated                        $     145,248    $     6,376

Net loss:
Net loss as previously reported $  (3,147,701)   $  (473,310)
Adjustments                         1,217,836        121,333

Restated                        $  (1,929,865)   $  (351,977)

The    previously   issued   financial   statements   included   gross
goodwill   of   approximately  $2,206,000.  Goodwill  has   not   been
recognized in the restated financial statements.
Investments in affiliates

The  Company  accounts  for its investments  in  affiliates  by  using
the  equity  method  of accounting, under which  the  Company's  share
of  earnings  of  these affiliates is reflected in  the  statement  of
operations.   Investments  acquired  through  the  issuance   of   the
Company's  stock  are  recorded  at an  average  of  the  most  recent
sales price of the stock at the date of acquisition.

Fixed Assets

Fixed  assets  are  recorded at cost and are  being  depreciated  over
their estimated useful lives ( 5 to 15 years).

Principles of Consolidation

The  consolidated  financial statements include the  accounts  of  the
Company   and  its  wholly  owned  subsidiary,  J-Bird  Records   Inc.
Material   intercompany   balances   and   transactions   have    been
eliminated in consolidation.

Cash

For   purposes   of   the  statement  of  cash  flows,   the   Company
considers  cash  as  cash held in operating accounts  and  all  highly
liquid  investments  with a maturity of three months  or  less  to  be
cash equivalents.

Inventory

Inventory  of   $  194,474 and $ 53,766, in 1998 and  1997  stated  at
the  lower  of  cost  or  market (first in, first  out),  consists  of
musical CDs.

Revenue Recognition

Revenue  is  recorded  when  CDs  are  shipped  from  its  fulfillment
center.    The  Company  maintains  its  inventory  at  a  fulfillment
center,  which  provides  the shipping to customers.  Most  sales  are
made  with  the  right of return of unsold units.  Estimated  reserves
for  returns  are  established  by management  based  upon  historical
and  industry  experience  and  the  Company's  product  mix  and  are
subject to the ongoing review and adjustment by the Company.

Recording Advances

Recording  advances  represent advances against  future  royalties  of
certain  recording  artists.   When anticipated  sales  appear  to  be
insufficient  to  fully  recover  the advances,  a  provision  against
current operations is made for anticipated losses

Royalties

Royalties  are  accrued  at  an average  12%  of  an  artist's  sales.
Mechanical  royalties  are  estimated at approximately  50  cents  per
musical CD sold.

Officers' Compensation

In  1998  and  1997  the  chief executive  officer  received  $    -0-
and  $  31,250  of  cash compensation. The financial  statements  have
been   adjusted  to  include  annual  compensation  of  $120,000,   to
reflect  the  fair  value of the services provided,  as  a  charge  to
operations.  Paid in capital has been increased, accordingly.

Income Taxes

The   Company   accounts   for  income  taxes   under   Statement   of
Financial   Accounting  Standard  No.  109,  "Accounting  for   Income
Taxes."    The   Company   has   a   net   loss   carry   forward   of
approximately $6,000,000, which expires through 2013.

Earnings Per Share

  In  1997  the  Company  adopted Statement  of  Financial  Accounting
Standards  No.  128,  "Earnings per Share".  Earnings  per  share  are
based   on   the   weighted  average  number  of  shares  outstanding.
Common  stock  equivalents have not been considered  as  their  effect
would be anti-dilutive.

Use of Estimates

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

Reclassifications and Restatements

In   the  previously  issued  financial  statements  the  Company  had
accounted  for  the  acquisition of J-Bird  Records,  Inc.  using  the
purchase   method   of  accounting  with  Caltron   Inc.   being   the
acquiring  company.  The  accompany  financial  statements  have  been
restated  to  reflect  J-Bird  Records,  Inc.  acquiring  Caltron.  In
addition  certain  sales of stock  to shareholders at  a  price  below
the  market  have  been  adjusted to reflect  the  difference  between
the  subscription  price and fair market value  of  the  stock   as  a
financing  fee.  The  financial statements  have  also  been  adjusted
to  reflect  the  estimated fair value of services  performed  by  the
chief executive office at no cost to the Company.

Note 2. J-Bird Records Inc.

On  October  7,  1997,  Caltron, Inc. entered into  a  stock  purchase
agreement   with   the  shareholders  of  J-Bird  Records,   Inc.   to
purchase  their  shares  of J-Bird Records, Inc.  for  the  equivalent
number  of  shares  of  the  Company.  The  total  number  of  Caltron
common  shares   issued  to  J-Bird  Records,  Inc.  shareholders   in
this  transaction  was  4,480,000 and  was  valued  at  $827,466,  the
net  assets  of  Caltron at date of acquisition. In  1997,   4,475,000
shares  were  issued  and  5,000  shares  were  issued  in  1998.  The
number   of  shares  issued  represents  approximately  107%  of   the
outstanding   Caltron  shares  at  October  7,  1997.  The   4,000,000
shares  received  by  the  founding shareholders  of  J-Bird  Records,
Inc.   in   connection  with  this  transaction  has  been  shown   as
outstanding  since  the  inception  of  J-Bird  Records,   Inc.   This
transaction  is  in  substance a capital transaction,  accompanied  by
a  recapitalization  and has been accounted for as  a  reverse  merger
with.   J-Bird   Records,   Inc  being  the  acquiring   company   for
accounting  purposes.  Caltron, Inc.  is  the  acquiring  company  for
legal purposes.
The  financial  statements  include the operations  of  Caltron,  Inc.
since   October  7,  1997,  date  of  acquisition.  At  the  date   of
acquisition  Caltron's  gross  assets  were  comprised  primarily   of
two   notes   receivable  valued  at  $850,000.    No   goodwill   was
recorded in this transaction.

The  following  table summarizes the unaudited pro  forma  results  of
operations  of  the  Company  for the year  ended  December  31,  1997
assuming  the  acquisition of Caltron, Inc. had  occurred  on  January
1,  1997.  The  unaudited  pro forma financial  information  presented
is  not  necessarily  indicative of the  results  of  operations  that
would  have  occurred had the acquisition taken place  on  January  1,
1997 or of future results of operations.

Net Sales                   $    145,248
                                                     
Net (Loss)                  $ (4,390,758)

Net (loss) per share        $       (.50)

Weighted average shares        8,784,010            
                                                     

Note 3. Disposition of Long Term Assets and Investments

Laminar Fluid Controls

On  April  22, 1997, the Caltron entered into an option agreement
with  Field Technologies, LLC ("FTL"), a company based in Bangor,
Maine.  Under this Agreement, the Caltron merged its patents into
FTL  for  a five percent (5%) equity position in FTL. FTL  is  an
operating  company run by the original inventor of  the  patented
valve technology.

In accordance with Statement of Financial Accounting Standard 121
"Accounting for the Impairment of Long Lived Assets and for  Long
Lived  Assets  to be  Disposed Of" no value was assigned  to  the
patents at the date of acquisition.

Rhode Island Renal Institute

On  May 3, 1996, the Caltron entered into an agreement with Rhode
Island  Renal  Institute ("RIRI") and Brooks  Porter  ("Porter").
RIRI  and  Porter  entered  into  a  development  and  investment
agreement and pursuant to this agreement, RIRI agreed to  provide
financial  support, clinical testing facilities and  supplies  to
Porter to assist his development of the Renal Ozone Sterilization
System  ("ROSS:").  Under the agreement with  Caltron   RIRI  and
Porter   assigned  to  Caltron  the  right  to  manufacture   and
distribute ROSS and any interests created by the development  and
investment  agreement among Porter and RIRI.  In accordance  with
the  agreement, RIRI received 125,000 shares of restricted common
stock of Caltron.

In  December 1997, the ROSS Corporation signed an agreement  with
the  Company  where  the ROSS Corporation is  going  to  buy  the
Company's  interest  in  the  ROSS Project  for  $500,  000.   In
connection with this transaction Caltron wrote down the value  of
its  investment to $500,000 as of the date of acquisition October
7,1997.   A  $500,000 note receivable was recorded by the Company
as of the date of acquisition.

In  November 1998 the Company and the ROSS Corporation agreed  to
exchange 125,000 shares of the Company's stock owned by ROSS  for
the  $500,000  note  receivable  in  the  accompanying  financial
statements.  The  Company  has recorded  this  transaction  as  a
$500,000 loss on disposition of assets in 1998.  The shares  have
been recorded as treasury stock.

Applied Advanced Technology

On  June 14, 1996, Caltron entered into an Agreement with Applied
Advanced Technologies, Inc. ("AAT") and Tovi Avnery ("Avnery") to
acquire  an  interest  in AAT and for AAT to  acquire  an  equity
interest  in  Caltron Under the terms of this agreement,  Caltron
received an interest in the rights, title and interest in and  to
an  electron beam technology.  Under this Agreement, Caltron  was
to  advance  a total of $300,000 dollars to AAT.  AAT received  a
total  of  $350,000.   In  return, the Company  received  114,546
shares of common stock of AAT, representing 45% ownership in  the
company.   Avnery  also  received 130,000  shares  of  restricted
common stock of the Company.

On  July  15, 1997, Caltron and AAT entered into a memorandum  of
understanding to terminate its relationship whereby  AAT will pay
Caltron  $350,000 plus interest, not to exceed $500,000, by  July
31,  1999.   In September, 1997, Caltron executed a  release  and
assignment  of interest in AAT, to be held in escrow  until  said
monies  owed to Caltron have been paid in full. Caltron  and  AAT
entered  into a pledge agreement in favor of the Company, wherein
AAT permitted the pledge of all issued and outstanding shares  of
capital stock of AAT, as well as its patent/patent pending  in  a
certain electron beam accelerator, to secure AAT's obligation  to
make  certain deferred payments to the Company under the $350,000
promissory  note.  AAT also executed a release and assignment  of
interest in Caltron. All shares of common stock of Caltron  owned
by  AAT  or  Avnery  are to be returned to Caltron  and  are  not
included in the outstanding shares of the Company at December 31,
1997.

In  May of 1998 $205,000 was received for full settlement of  the
$350,000  note  due  from AAT.  The difference  of  $145,000  was
recorded as a loss on disposal of assets in the 1998. All  shares
issued  in  this transaction have been returned to  the  original
issuing  parties.  The  Company's shares have  been  recorded  as
treasury stock.

Note 4. Related Party Transactions

In  October 1998 the Company entered into a credit agreement with
IMM   International,   Inc.,  ("IMM")   a   company   that   owns
approximately  50%  of  the outstanding shares  of  the  Company,
whereby  IMM  will  provide up to $500,000 in  financing  to  the
Company  for working capital purposes. The agreement  expired  on
March  31,1999.  Amounts outstanding under  this  agreement  bear
interest  at 8% and are due on June 30,2000. At December  31,1998
the   Company   had  borrowed  $113,560  under  this   agreement.
Subsequent to December 31,1998 the Company borrowed an additional
$ 191,000 under the credit agreement .

In April and July of 1997, an officer of Caltron  entered into
stock subscription agreements with Caltron, Inc.  to purchase
135,000 shares of stock at $.10 per share. The difference between
the subscription price and the fair market value of the stock,
$562,800, was recorded as consulting fees prior to the merger
with J Bird Records Inc.

In July of 1997,  a shareholder of Caltron entered into a stock
subscription agreement with Caltron, Inc.  to purchase 250,000
shares of stock at $.10 per share. The difference between the
subscription price and the fair market value of the stock,
$347,500, was recorded as financing fees prior to the merger with
J-Bird Records Inc.

In  December of 1997, certain shareholders of the Company entered
into  stock subscription agreements with the Company, to purchase
2,000,000  shares  of  stock at $.25 per  share.  The  difference
between the
subscription  price  and  the fair market  value  of  the  stock,
$868,000  was  recorded  as  a  non-cash  charge  to  operations,
"financing fee-sale of discounted stock".

In   1998, certain shareholders of the Company entered into stock
subscription  agreements with the Company, to purchase  2,750,000
shares  of  stock at prices ranging from $.25 to $.40 per  share.
The difference between the subscription price and the fair market
value  of the stock, $1,277,500 was recorded as a non-cash charge
to  operations,  "financing fee-sale of  discounted  stock".  IMM
purchased  2,000,000  shares  for $525,000  in  1998  and  repaid
$119,750  of  amounts  outstanding under stock  subscriptions  at
December  31,1997.  At  December 31,  1998,   $250,000  in  stock
subscriptions  receivable  were  outstanding  from  IMM  who  had
purchased the stock at a discount to market in 1997.

Note 5. Downloading Agreement

In  1998 the Company and a2b Music, a subsidiary of AT&T, entered
into  an  agreement  whereby certain J-Bird  artists  would  have
single musical productions available to be downloaded from  a  J-
Bird  and  a2B  Music co - branded web site( that is  hosted  and
promoted as part of the a2b Music web site). The agreement allows
for approximately 15 musical titles from the J-Bird catalog to be
added  to  the  web  site each calendar quarter  .The  charge  to
consumers for downloading the music is $1.99 per song track.  A2b
is  responsible for collecting the fees and maintaining  the  web
site. Revenues will be shared equally after a2b recovers its cost
for  developing  the web site not to exceed  $2,000.   J-Bird  is
responsible  to  pay its artists 12% of its revenue  share  as  a
royalty  fee and $.071 on each download as part of the mechanical
license. Certain artists such as Billy Squier share equally the J-
Bird  revue  as  a  royalty fee. There was no revenue   or  costs
associated with this agreement in 1998.

Note 6.  Fixed Assets

Fixed assets consist of:

Computer equipment and software                       $   171,265
 Leasehold improvement                                      8,571
 Furniture and fixtures                                    22,836

                                                          202,672
 Accumulated depreciation                                 (74,170)


                                                       $  128,502

=======
Note 7.  Note Payable

The  amount  due at December 31, 1998 consist of a  $15,000  note
payable  to an individual, bearing interest at the prime rate  to
provide the Company working capital.

In connection with the loan described above, warrants to purchase
2% of the J Bird Records Inc. outstanding common stock prior to a
merger  or  acquisition were issued. The warrants are exercisable
through  March 2002 at $.25 per share. The number of warrants  to
be  issued is 87,140 based upon the merger with Caltron Inc.  The
difference  between the exercise price of the  warrants  and  the
fair  market value of the stock at the date of the loan, $65,000,
was recorded as interest expense in 1997.
                                
Note 8. Common Stock

In  1998, the Company entered into investment advisory agreements
with  two  firms  to assist the Company in raising  capital.  The
firms were issued 600,000 shares  for their services. The Company
recorded a charge to operations for $ 595,000 in connection  with
these  agreements. The value of the stock issued was  based  upon
the  current market price of the stock at the date the agreements
ere entered into.

At  December  31,  1998, warrants to purchase  87,140  shares  of
common  stock  exercisable through March 2002 at $.25  per  share
were outstanding. See note

At  December  31,  1998, options to purchase $260,000  shares  of
stock  at $1 per share exercisable through 2002 were outstanding.
No  expense was recorded as the option price exceeded the  market
price of the Company's stock at date of grant.

An  original J-Bird records Inc.  stockholder was granted an option
to  purchase  shares,  under the same terms of future  subscription
agreements  for  stock  to be issued under fair  market  value,  to
maintain  a  2.3 % ownership percentage of the Company. No  options
have  been  exercised  under this agreement.  Approximately  30,000
shares may be issued upon exercise of the option.

Note 9.  Commitments and Contingencies

(a)  Leases

The  Company  has  an operating lease agreements  for  an  office
condominium.  Aggregate  annual minimum  future  rental  payments
under  the leases are $31,650, in 1999 and $ 18,466 in 2000.  The
Company  has  an  option to purchase the office  condominium  for
$379,800 at the end of the lease.  Fifty percent of the aggregate
lease  payments  would  be applied to the  purchase  price.  Rent
expense was approximately $ 31,000 and $ 8,000 in 1998 and  1997,
respectively.

(b)  Operating  Agreements

The Company has a one year agreement with a public relations firm
that requires monthly payments of $4,500 in 1999.

(c) Common Stock

During  the  years ended December 31, 1998 and 1997, the  Company
issued  shares  of  its  common stock.   These  shares  were  not
registered  under  the  Securities  Act  of  1933  based  on  the
exemption from registration thereunder provided by section 4 (2),
thereof for offerings not involving a public offering.

Note 9.  Subsequent Events

In  January 1999 the Company obtained a $100,000 line  of  credit
with  a commercial bank.  The line of bears interest at 2%  above
the  bank's  prime  rate. Certain officers and shareholders  have
personally  guaranteed  the  debt.   The  Company  has   borrowed
$100,000 as of March 31,1999 under the line of credit.