SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                    FORM 10-KSB

[x]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
 Act of 1934 [Fee Required]

For the fiscal year ended March 31, 1999

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]

For the transition period from                          to

Commission file number 0-24376

                                               ST. JAMES GROUP, INC.
                          (Exact name of small business issuer in its charter)

                         DELAWARE                                    33-0612125
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer
 Identification No.)

                 1500 Quail Street, Suite 550
                 Newport Beach, California                               92660
           (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:               (714) 660-1500
                                                             -------------------

Securities registered pursuant to Section 12(b) of the Act:              None
                                                             ----------------

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par
 value $.001
                                                             ------------------

           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

           Check if there is no disclosure  of delinquent  filers in response to
Item 405 of Regulation S-B is not contained 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-K
or any amendment to this Form 10-K. [ X ]

           State issuer's revenues for its most recent fiscal year: None

           The aggregate market value of the voting stock held by non-affiliates
of the  registrant  as of March 31, 1999 was not  determinable  since the Common
Stock was not traded.

           The number of shares  outstanding  of the issuer's  classes of Common
Stock as of March 31, 1999:

Common Stock, $.001 Par Value - 424,600 shares

                                    DOCUMENTS INCORPORATED BY REFERENCE:  NONE


<PAGE>



                                                      PART I

Item 1.   DESCRIPTION OF BUSINESS

Background

 St. James Group, Inc., a Delaware  corporation (the "Company") was incorporated
on June 11, 1992. The Company has no operating history other than organizational
matters,  and was formed  specifically  to be a "clean public shell" and for the
purpose of either merging with or acquiring an operating  company with operating
history and assets.  The  Securities  and  Exchange  Commission  has defined and
designated  these  types  of  companies  as  "blind  pools"  and  "blank  check"
companies.

 The primary  activity of the Company will involve seeking merger or acquisition
candidates  with  whom it can  either  merge or  acquire.  The  Company  has not
selected  any  company  for  acquisition  or merger and does not intend to limit
potential acquisition  candidates to any particular field or industry,  but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry.  The Company's plans are in the conceptual stage
only.

 The executive  offices of the Company are located at 1500 Quail  Street,  Suite
550, Newport Beach, California 92660. Its telephone number is (714) 660-1500.

Plan of Operation - General

 The Company was  organized  for the purpose of creating a corporate  vehicle to
seek,  investigate and, if such investigation  warrants,  acquire an interest in
one or more  business  opportunities  presented to it by persons or firms who or
which desire to seek the perceived advantages of a publicly held corporation. At
this  time,the  Company  has no  plan,  proposal,  agreement,  understanding  or
arrangement to acquire or merge with any specific  business or company,  and the
Company has not  identified any specific  business or company for  investigation
and  evaluation.  No member of Management or promotor of the Company has had any
material  discussions  with any other company with respect to any acquisition of
that  company.  Although the  Company's  Common  Stock is  currently  not freely
tradeable,  it will  eventually  become  so  under  exemptions  such as Rule 144
promulgated  under the Securities Act of 1933. See  "Description of Securities."
The Company will not restrict its search to any specific  business,  industry or
geographical  location, and the Company may participate in a business venture of
virtually any kind or nature. The discussion of the proposed business under this
caption and throughout this Registration  Statement is purposefully  general and
is not meant to be restrictive of the Company's virtually  unlimited  discretion
to search for and enter into potential business opportunities.

 The  Company  intends  to obtain  funds in one or more  private  placements  to
finance the operation of any acquired business. Persons purchasing securities in
these placements and other  shareholders will likely not have the opportunity to
participate in the decision relating to any acquisition.  The Company's proposed
business is sometimes  referred to as a "blind pool" because any investors  will
entrust their investment  monies to the Company's  management before they have a
chance  to  analyze  any   ultimate  use  to  which  their  money  may  be  put.
Consequently,  the  Company's  potential  success  is heavily  dependent  on the
Company's  management,   which  will  have  virtually  unlimited  discretion  in
searching for and entering into a business opportunity. None of the officers and
directors of the Company has had any experience in the proposed  business of the
Company.  There can be no  assurance  that the Company will be able to raise any
funds in private placements.  In any private placement,  management may purchase
shares  on the same  terms as  offered  in the  private  placement.  (See  "Risk
Factors" and "Management").

 Management  anticipates that it will only participate in one potential business
venture. This lack of diversification should be considered a substantial risk in
investing  in the  Company  because  it will not  permit  the  Company to offset
potential  losses  from one  venture  against  gains  from  another  (see  "Risk
Factors").

 The Company  may seek a business  opportunity  with a firm which only  recently
commenced  operations,  or a developing  company in need of additional funds for
expansion  into new products or markets,  or seeking to develop a new product or
service,  or an  established  business  which may be  experiencing  financial or
operating  difficulties  and is in the  need  for  additional  capital  which is
perceived to be easier to raise by a public company.

                                                         2

<PAGE>



In some instances,  a business opportunity may involve the acquisition or merger
with a corporation  which does not need  substantial  additional  cash but which
desires to establish a public trading  market for its common stock.  The Company
may purchase assets and establish wholly owned  subsidiaries in various business
or purchase existing businesses as subsidiaries.

 The Company  anticipates that the selection of a business  opportunity in which
to participate will be complex and extremely risky.  Because of general economic
conditions,  rapid  technological  advances being made in some  industries,  and
shortages  of available  capital,  management  believes  that there are numerous
firms  seeking the benefits of a publicly  traded  corporation.  Such  perceived
benefits of a publicly traded corporation may include  facilitating or improving
the  terms  on  which  additional  equity  financing  may be  sought,  providing
liquidity  for the  principals  of a  business,  creating a means for  providing
incentive  stock  options  or  similar  benefits  to  key  employees,  providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other factors.  Potentially  available  business  opportunities may occur in
many different  industries and at various  stages of  development,  all of which
will make the task of  comparative  investigation  and analysis of such business
opportunities extremely difficult and complex.

 As is  customary  in the  industry,  the  Company  may pay a  finder's  fee for
locating an acquisition  prospect.  If any such fee is paid, it will be approved
by the Company's  Board of Directors and will be in accordance with the industry
standards.  Such  fees  are  customarily  between  1% and 5% of the  size of the
transaction,  based upon a sliding scale of the amount  involved.  Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management has adopted a policy that such a finder's fee
or real estate  brokerage fee could,  in certain  circumstances,  be paid to any
employee,  officer,  director or 5% shareholder  of the Company,  if such person
plays a material role in bringing a transaction to the Company.

 As part of any transaction, the acquired company may require that Management or
other  stockholders  of the Company sell all or a portion of their shares to the
acquired  company,  or  to  the  principals  of  the  acquired  company.  It  is
anticipated  that the sales  price of such shares will be lower than the current
market price or  anticipated  market price of the Company's  Common  Stock.  The
Company's  funds are not expected to be used for purposes of any stock  purchase
from insiders.  The Company shareholders will not be provided the opportunity to
approve or consent to such  sale.  The  opportunity  to sell all or a portion of
their  shares in  connection  with an  acquisition  may  influence  management's
decision to enter into a specific transaction. However, management believes that
since the  anticipated  sales  price will be less than  market  value,  that the
potential  of a stock  sale by  management  will be a  material  factor on their
decision to enter a specific transaction.

 The above  description of potential sales of management stock is not based upon
any corporate bylaw, shareholder or board resolution,  or contract or agreement.
No other  payments of cash or property are expected to be received by Management
in connection with any acquisition.

 The Company has not formulated  any policy  regarding the use of consultants or
outside advisors,  but does not anticipate that it will use the services of such
persons.

 The Company has, and will continue to have,  insufficient capital with which to
provide the owners of business  opportunities with any significant cash or other
assets.  However,  management believes the Company will offer owners of business
opportunities the opportunity to acquire a controlling  ownership  interest in a
public company at substantially less cost than is required to conduct an initial
public offering.  The owners of the business  opportunities will, however, incur
significant post-merger or acquisition registration costs in the event they wish
to register a portion of their shares for subsequent sale. The Company will also
incur  significant legal and accounting costs in connection with the acquisition
of a  business  opportunity  including  the  costs of  preparing  post-effective
amendments,   Forms  8-K,   agreements   and  related   reports  and   documents
nevertheless,  the  officers and  directors  of the Company  have not  conducted
market  research and are not aware of  statistical  data which would support the
perceived  benefits of a merger or acquisition  transaction  for the owners of a
business opportunity.

 The  Company  does not  intend to make any loans to any  prospective  merger or
acquisition candidates or to unaffiliated third parties.

                                                         3

<PAGE>




Sources of Opportunities

 The Company  anticipates that business  opportunities for possible  acquisition
will be referred by various  sources,  including  its  officers  and  directors,
professional advisers, securities broker-dealers,  venture capitalists,  members
of the financial community, and others who may present unsolicited proposals.

 The Company will seek a potential business  opportunity from all known sources,
but will rely principally on personal  contacts of its officers and directors as
well as indirect  associations  between them and other business and professional
people.   It  is  not  presently   anticipated  that  the  Company  will  engage
professional firms specializing in business acquisitions or reorganizations.

 The  officers  and  directors  of the Company are  currently  employed in other
positions  and will  devote only a portion of their time (not more than one hour
per  week)  to the  business  affairs  of the  Company,  until  such  time as an
acquisition  has been  determined  to be highly  favorable,  at which  time they
expect to spend full time in  investigating  and closing any  acquisition  for a
period of two weeks.  In addition,  in the face of  competing  demands for their
time, the officers and directors may grant priority to their full-time positions
rather than to the Company.

Evaluation of Opportunities

 The analysis of new business  opportunities  will be undertaken by or under the
supervision  of the  officers and  directors of the Company (see  "Management").
Management   intends  to  concentrate  on   identifying   prospective   business
opportunities which may be brought to its attention through present associations
with management.  In analyzing  prospective business  opportunities,  management
will consider such matters as the available technical,  financial and managerial
resources;  working  capital  and  other  financial  requirements;   history  of
operation,  if any; prospects for the future;  present and expected competition;
the quality and experience of management services which may be available and the
depth of that  management;  the potential for further  research,  development or
exploration;  specific  risk factors not now  foreseeable  but which then may be
anticipated to impact the proposed activities of the Company;  the potential for
growth or expansion;  the potential for profit; the perceived public recognition
or acceptance of products,  services or trades; name  identification;  and other
relevant  factors.  Officers and directors of each Company will meet  personally
with   management  and  key  personnel  of  the  firm  sponsoring  the  business
opportunity as part of their investigation.  To the extent possible, the Company
intends to utilize  written reports and personal  investigation  to evaluate the
above factors.  The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained.

 It may be anticipated  that any  opportunity in which the Company  participates
will present certain risks. Many of these risks cannot be adequately  identified
prior to selection of the specific opportunity,  and the Company's  shareholders
must,  therefore,  depend on the ability of  management to identify and evaluate
such risk. In the case of some of the opportunities available to the Company, it
may be  anticipated  that the  promoters  thereof  have been unable to develop a
going concern or that such business is in its  development  stage in that it has
not generated  significant revenues from its principal business activities prior
to the  Company's  participation.  There is a risk,  even  after  the  Company's
participation  in the  activity  and the related  expenditure  of the  Company's
funds,  that the  combined  enterprises  will  still be unable to become a going
concern or advance beyond the development  stage.  Many of the opportunities may
involve new and untested products, processes, or market strategies which may not
succeed.  Such  risks  will  be  assumed  by the  Company  and,  therefore,  its
shareholders.

 The Company will not restrict its search for any specific kind of business, but
may acquire a venture which is in its preliminary or development stage, which is
already in operation,  or in essentially  any stage of its corporate life. It is
currently  impossible to predict the status of any business in which the Company
may become  engaged,  in that such  business may need  additional  capital,  may
merely desire to have its shares  publicly  traded,  or may seek other perceived
advantages which the Company may offer.

Acquisition of Opportunities

 In implementing a structure for a particular business acquisition, the Company
 may become a party to a

                                                         4

<PAGE>



merger,  consolidation,  reorganization,  joint venture,  franchise or licensing
agreement  with another  corporation  or entity.  It may also purchase  stock or
assets of an existing  business.  On the  consummation  of a transaction,  it is
possible that the present management and shareholders of the Company will not be
in control of the  Company.  In  addition,  a majority  or all of the  Company's
officers and directors may, as part of the terms of the acquisition transaction,
resign and be  replaced  by new  officers  and  directors  without a vote of the
Company's shareholders.

 It is anticipated that any securities issued in any such  reorganization  would
be issued in reliance on exemptions from registration  under applicable  Federal
and state  securities  laws.  In some  circumstances,  however,  as a negotiated
element of this  transaction,  the Company may agree to register such securities
either at the time the transaction is consummated,  under certain conditions, or
at specified time thereafter.  The issuance of substantial additional securities
and their  potential  sale into any  trading  market  which may  develop  in the
Company's  Common Stock may have a depressive  effect on such market.  While the
actual  terms of a  transaction  to which the Company  may be a party  cannot be
predicted,  it may be expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event and thereby structure
the  acquisition  in  a so  called  "tax  free"  reorganization  under  Sections
368(a)(1) or 351 of the Internal  Revenue Code of 1986, as amended (the "Code").
In order to obtain tax free  treatment  under the Code,  it may be necessary for
the owners of the  acquired  business to own 80% or more of the voting  stock of
the surviving entity. In such event, the shareholders of the Company,  including
investors  in this  offering,  would  retain  less  than 20% of the  issued  and
outstanding  shares of the surviving  entity,  which could result in significant
dilution in the equity of such shareholders.

 As part of the Company's  investigation,  officers and directors of the Company
will meet personally  with  management and key personnel,  may visit and inspect
material  facilities,  obtain  independent  analysis or  verification of certain
information provided,  check reference of management and key personnel, and take
other reasonable  investigative measures, to the extent of the Company's limited
financial resources and management expertise.

 The manner in which each Company  participates in an opportunity will depend on
the nature of the  opportunity,  the respective needs and desires of the Company
and  other  parties,  the  management  of  the  opportunity,  and  the  relative
negotiating strength of the Company and such other management.

 With respect to any mergers or acquisitions,  negotiations  with target company
management  will be expected  to focus on the  percentage  of the Company  which
target company shareholders would acquire in exchange for their shareholdings in
the target company.  Depending upon,  among other things,  the target  company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
lesser  percentage  ownership  interest in the Company  following  any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company  acquires a target company with  substantial  assets.  Any
merger  or  acquisition  effected  by the  Company  can be  expected  to  have a
significant  dilative  effect on the  percentage of shares held by the Company's
then shareholders, including purchasers in this offering. (See "Risk Factors.")

 The Company will not have sufficient funds (unless it is able to raise funds in
a private  placement) to undertake any  significant  development,  marketing and
manufacturing of any products which may be acquired. Accordingly,  following the
acquisition  of any such  product,  the  Company  will,  in all  likelihood,  be
required to either seek debt or equity  financing  or obtain  funding from third
parties, in exchange for which the Company would probably be required to give up
a  substantial  portion of its  interest in any  acquired  product.  There is no
assurance that the Company will be able either to obtain additional financing or
interest  third  parties  in  providing  funding  for the  further  development,
marketing and manufacturing of any products acquired.

 It is anticipated that the investigation of specific business opportunities and
the  negotiation,  drafting  and  execution of relevant  agreements,  disclosure
documents and other  instruments  will require  substantial  management time and
attention and  substantial  costs for  accountants,  attorneys and others.  If a
decision is made not to participate in a specific business opportunity the costs
therefore  incurred  in the  related  investigation  would  not be  recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business  opportunity,  the failure to consummate that transaction may result in
the loss of the Company of the related costs incurred.


                                                         5

<PAGE>



 Management  believes  that the Company  may be able to benefit  from the use of
"leverage"  in  the  acquisition  of  a  business   opportunity.   Leveraging  a
transaction involves the acquisition of a business through incurring significant
indebtedness  for a large  percentage of the purchase  price for that  business.
Through a leveraged  transaction,  the Company  would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business  opportunities or to other activities.  The borrowing involved
in a  leveraged  transaction  will  ordinarily  be  secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate  sufficient  revenues to make  payments on the debt incurred by
the Company to acquire that  business  opportunity,  the lender would be able to
exercise  the  remedies  provided  by  law  or  by  contract.  These  leveraging
techniques,  while  reducing the amount of funds that the Company must commit to
acquiring a business opportunity,  may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any  acquisition  by the Company.  No assurance can be given as to
the terms or the  availability  of financing for any acquisition by the Company.
During  periods  when  interest  rates are  relatively  high,  the  benefits  of
leveraging  are not as great as during  periods of lower  interest rates because
the investment in the business  opportunity  held on a leveraged basis will only
be profitable if it generates  sufficient revenues to cover the related debt and
other costs of the  financing.  Lenders  from which the Company may obtain funds
for  purposes  of a  leveraged  buy-out  may impose  restrictions  on the future
borrowing,  distribution,  and  operating  policies  of the  Company.  It is not
possible at this time to predict the  restrictions,  if any,  which  lenders may
impose or the impact thereof on the Company.

Competition

 The  Company  is an  insignificant  participant  among  firms  which  engage in
business  combinations  with, or financing of,  development  stage  enterprises.
There are many  established  management and financial  consulting  companies and
venture capital firms which have  significantly  greater financial and personnel
resources,  technical  expertise and experience than the Company. In view of the
Company's limited financial resources and management  availability,  the Company
will  continue  to  be a  significant  competitive  disadvantage  vis-a-vis  the
Company's competitors.

Regulation and Taxation

 The Investment Company Act of 1940 defines an "investment company" as an issuer
which is or holds  itself out as being  engaged  primarily  in the  business  of
investing,  reinvesting  or trading of  securities.  While the Company  does not
intend to  engage in such  activities,  the  Company  could  become  subject  to
regulation  under the  Investment  Company  Act of 1940 in the event the Company
obtains or  continues  to hold a minority  interest  in a number of  development
stage   enterprises.   The  Company  could  be  expected  to  incur  significant
registration  and compliance  costs if required to register under the Investment
Company  Act of 1940.  Accordingly,  management  will  continue  to  review  the
Company's  activities  from  time  to  time  with a  view  toward  reducing  the
likelihood the Company could be classified as an "investment company."

 The Company  intend to structure a merger or  acquisition  in such manner as to
minimize  Federal  and state tax  consequences  to the Company and to any target
company.

Employees

 The  Company's  only  employees  at the  present  time  are  its  officers  and
directors,  who will devote as much time as the Board of Directors  determine is
necessary to carry out the affairs of the Company. (See "Management").


                                                         6

<PAGE>



Item 2.   DESCRIPTION OF PROPERTY

 The Company rents an executive  suite on an as needed  basis.  The Company pays
its own  charges  for long  distance  telephone  calls and  other  miscellaneous
secretarial, photocopying and similar expenses.

Item 3.   LEGAL PROCEEDINGS

 Not Applicable.

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

 No matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year ended March 31, 1999.

                                                         7

<PAGE>



                                                      PART II


Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS

         The Company's Common Stock has not traded.  As of March 31, 1999,
there were 110 stockholders of
record.

Item 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

             The  Company  has been  recently  formed and has not engaged in any
operations other than  organizational  matters.  Its operating  deficit is being
founded by an officer and director.

Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The consolidated  financial statements of the Company required to be
            included in Item 7 are set forth in the Financial  Statements Index.
            Its operating deficit is being funded by an officer and director.

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

            Not Applicable.

                                                         8

<PAGE>



                                                     PART III

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

Directors and Executive Officers

            The members of the Board of Directors of the Company serve until the
next  annual  meeting  of  stockholders,  or until  their  successors  have been
elected. The officers serve at the pleasure of the Board of Directors.
Information  as to the  director  and  executive  officer  of the  Company is as
follows.

            Jehu Hand has been  President and Secretary of the Company since its
inception and Chief  Financial  Officer since January 1, 1995. Mr. Hand has been
president and director of Las Vegas Airlines,  Inc.  (formerly Hermaton Company)
since 1992.  Mr. Hand has been engaged in corporate and  securities law practice
and has been a partner  of the law firm of Hand & Hand since  1992.  Hand & Hand
incorporated  as a law  corporation  in May 1994.  From January 1992 to December
1992 he was the Vice President-Corporate  Counsel and Secretary of Laser Medical
Technology,  Inc.,  which  designs,  manufactures  and markets dental lasers and
endodontics equipment.  He was a director of Laser Medical from February 1992 to
February 1993. From January to October,  1992 Mr. Hand was Of Counsel to the Law
Firm of Lewis, D'Amato,  Brisbois & Bisgaard.  From January 1991 to January 1992
he was a  shareholder  of  McKittrick,  Jackson,  DeMarco &  Peckenpaugh,  a law
corporation.  From January to December 1990 he was a partner of Day,  Campbell &
Hand,  and was an  associate  of its  predecessor  law firm  from  July  1986 to
December  1989.  From 1984 to June 1986 Mr. Hand was an associate  attorney with
Schwartz, Kelm, Warren & Rubenstein in Columbus, Ohio. Jehu Hand received a J.D.
from New York University School of Law and a B.A. from Brigham Young University.

Conflicts of Interest

            Certain  conflicts of interest now exist and will  continue to exist
between the Company and its officers and directors due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.

            Certain  conflicts of interest may exist between the Company and its
management,  and  conflicts  may  develop in the  future.  The  Company  has not
established  policies or procedures  for the  resolution of current or potential
conflicts of  interests  between the  Company,  its  officers  and  directors or
affiliated entities.  There can be no assurance that management will resolve all
conflicts  of interest in favor of the  Company,  and failure by  management  to
conduct the  Company's  business in the  Company's  best  interest may result in
liability to the  management.  The officers and directors are accountable to the
Company as  fiduciaries,  which means that they are  required  to exercise  good
faith and integrity in handling the Company's affairs.  Shareholders who believe
that the  Company  has been  harmed by  failure of an  officer  or  director  to
appropriately  resolve any conflict of interest may, subject to applicable rules
of  civil  procedure,  be able to bring a class  action  or  derivative  suit to
enforce their rights and the Company's rights.

            The Company has no arrangement,  understanding or intention to enter
into any  transaction for  participating  in any business  opportunity  with any
officer,  director,  or  principal  shareholder  or with  any  firm or  business
organization with which such persons are affiliated,  whether by reason of stock
ownership, position as an officer or director, or otherwise.

            The  Company,   by   resolution   of  its  Board  of  Directors  and
stockholders,  adopted a 1992 Stock  Option Plan (the  "Plan") on June 11, 1992.
The Plan enables the Company to offer an incentive based compensation  system to
employees,  officers and directors and to employees of companies who do business
with the Company.

            In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries or employees of companies with which the Company

                                                         9

<PAGE>



does business become  participants in the Plan upon receiving grants in the form
of stock options or restricted stock. A total of 2,000,000 shares are authorized
for issuance  under the Plan, of which no shares are issuable.  The Company does
not intend to grant options until such time as a merger or acquisition  has been
consummated.  The  Company  may  increase  the number of shares  authorized  for
issuance  under the Plan or may make other  material  modifications  to the Plan
without  shareholder  approval.  However,  no amendment  may change the existing
rights of any option holder.

            Any shares  which are  subject to an award but are not used  because
the terms and  conditions of the award are not met, or any shares which are used
by participants to pay all or part of the purchase price of any option may again
be used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.

            Stock  options  may be granted  as  non-qualified  stock  options or
incentive  stock  options,  but incentive  stock options may not be granted at a
price  less  than 100% of the fair  market  value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market  value of the
stock as of the date of grant.  Restricted  stock may not be  granted  under the
Plan in connection with incentive stock options.

            Stock options may be exercised  during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability,  whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock  acquired  through the  exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination  of notes,  cash and shares of the Company's  common stock or a
combination  thereof.  Incentive  stock options may only be issued to directors,
officers and employees of the Company.

            Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant  contains  the AO  feature  and if a  participant  pays all or part of the
purchase  price of the option with shares of the Company's  common  stock,  then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the  Company  equal to the sum of the number of whole  shares  used by the
participant in payment of the purchase price and the number of whole shares,  if
any,  withheld  by the Company as payment for  withholding  taxes.  An AO may be
exercised  between the date of grant and the date of  expiration,  which will be
the same as the date of expiration of the option to which the AO is related.

            Stock appreciation  rights and/or restricted stock may be granted in
conjunction  with, or may be unrelated to stock  options.  A stock  appreciation
right entitles a participant to receive a payment,  in cash or common stock or a
combination  thereof,  in an amount equal to the excess of the fair market value
of the stock at the time of exercise  over the fair market  value as of the date
of grant.  Stock  appreciation  rights may be exercised  during a period of time
fixed by the  Committee not to exceed ten years after the date of grant or three
years after death or disability,  whichever is later.  Restricted stock requires
the  recipient  to  continue  in service as an  officer,  director,  employee or
consultant  for a fixed period of time for  ownership of the shares to vest.  If
restricted  shares or stock  appreciation  rights  are  issued  in  tandem  with
options,  the  restricted  stock or stock  appreciation  right is canceled  upon
exercise of the option and the option will  likewise  terminate  upon vesting of
the restricted shares.

Item 10. EXECUTIVE COMPENSATION

            No  compensation  is paid or  anticipated  to be paid by the Company
until an acquisition is made.

            On acquisition  of a business  opportunity,  current  management may
resign and be  replaced  by persons  associated  with the  business  opportunity
acquired,  particularly if the Company participates in a business opportunity by
effecting a reorganization,  merger or  consolidation.  If any member of current
management  remains after  effecting a business  opportunity  acquisition,  that
member's time  commitment will likely be adjusted based on the nature and method
of the  acquisition  and  location of the business  which  cannot be  predicted.
Compensation of management

                                                        10

<PAGE>



will be  determined  by the new  board of  directors,  and  shareholders  of the
Company will not have the opportunity to vote on or approve such compensation.

            Directors  currently  receive no  compensation  for their  duties as
directors.

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The following table sets forth information relating to the beneficial
ownership of Company  common stock by those  persons  beneficially  holding more
than 5% of the Company capital stock,  by the Company's  directors and executive
officers,  and by all of the Company's  directors  and  executive  officers as a
group, as of March 31, 1999.
<TABLE>
<CAPTION>

                                                                                   Percentage
               Name of                           Number of                       of Outstanding
             Stockholder                       Shares Owned                       Common Stock

<S>                   <C>                           <C>                               <C>
            Jehu Hand (1)(2)                        233,800                           41.1%

            All officers and
            directors as a group
            (1 person) (1)                          233,800                           41.1%

         (1)      Includes 143,800 shares of common stock issuable upon conversion of a promissory note.
         (2)      The address of such person is care of the Company.
</TABLE>

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In connection  with organizing the Company,  persons  consisting of its
officers,  directors, and other individuals paid an aggregate of $500 in cash to
purchase a total of 400,000  shares of Common Stock at an average sales price of
$.00125 per share.  In April 1993  Messrs.  Hand and Anderson  also  contributed
$500.00 to the Company as a contribution to capital.  Under Rule 405 promulgated
under the Securities Act of 1933, Messrs.  Hand and Anderson may be deemed to be
promoters of the Company.  No other persons are known to Management  which would
be deemed to be promoters.

         An officer of the Corporation has advanced  certain  expenses on behalf
of the  Company.  As of March 31,  1995,  1996 and 1997 such  expenses  totalled
$1,786, $1,896 and $2,006. On June 1, 1995 the Company gave the officer a demand
promissory note convertible into 143,800 shares of common stock at the officer's
option.


                                                        11

<PAGE>



                                                      PART IV


Item 13.    EXHIBITS AND REPORTS ON FORM 8-K

       (a) Exhibits.  The following exhibits of the Company are included herein.


    Exhibit No.            Document Description

        3.                 Certificate of Incorporation and Bylaws

                           3.1.     Articles of Incorporation(1)
                           3.2      Bylaws(1)

         10.               Material Contracts

                           10.1.    1992 Stock Option Plan(1)
                           10.2     Stock Option Agreement with Jehu Hand(1)
                           10.3     Stock Option Agreement with Eric Anderson(1)
                           10.4     Demand Convertible Promissory Note from Jehu
 Hand(2)

(1)      Incorporated by reference to such exhibit as filed with the Company's
registration statement on Form 10-SB,
         File No. 0-24376.

(2)      Incorporated by reference to the Company's 1996 Annual Report.

        (b)                Reports on Form 8-K.

                           Not Applicable.


                                                        12

<PAGE>


<TABLE>
<CAPTION>

ST. JAMES GROUP, INC.
(A Development Stage Company)                                                      Statements of Financial Position


                                                      ASSETS

                                                                                    March 31,        March 31,
                                                                                      1999             1998

<S>                                                                                 <C>               <C>
     TOTAL ASSETS                                                                   $                $



                                       LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES - Accounts payable                                              $  2,016         $   1,896

STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000 shares
  authorized; no shares issued and outstanding

Common Stock, $.001 par value; 20,000,000 shares
  authorized; 424,600 shares issued and outstanding                                      425               425

Additional paid-in Capital                                                               821               821

Accumulated deficit during the development stage                                     (3,252)           (3,142)


     TOTAL STOCKHOLDERS' EQUITY                                                      (2,016)           (1,786)



TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                          $                $







</TABLE>



                     The  accompanying   notes  are  an  integral  part  of  the
financial statements.

                                                        13

<PAGE>
<TABLE>
<CAPTION>



ST. JAMES GROUP, INC.
(A Development Stage Company)                                                              Statements of Operations



                                                                                                     CUMULATIVE
                                                                                                        FROM
                                                                  FOR THE                             INCEPTION
                                                                YEAR ENDED                         (June 11, 1992)
                                                                    TO                                             TO
                                                              March 31, 1999      March 31, 1998   March 31, 1999


<S>                                                           <C>                 <C>              <C>
REVENUES                                                      $                  $                 $

OPERATING EXPENSES

    General and Administrative                                           110                 110            2,989
    Amortization                                                                                              263
TOTAL OPERATING EXPENSES                                                 110                 110            3,252

NET (LOSS)                                                    $        (110)     $         (110)   $      (3,252)

NET (LOSS) PER SHARE                                          $        (Nil)     $         (Nil)   $          .01


WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                                               424,600             424,600          418,913





</TABLE>






























                     The  accompanying   notes  are  an  integral  part  of  the
financial statements.

                                                        14

<PAGE>
<TABLE>
<CAPTION>



ST. JAMES GROUP, INC.                                                                      Statement of Changes in Stockholders'
(A Development Stage Company)                                                              Equity From Inception (June 11, 1992)
                                                                                                          Through March 31, 1999

                                                                                                    Accumulated
                                                                                                      Deficit
                                                        Common Stock              Additional        During the
                                                                                    Paid-In         Development
                                                  Shares            Amount          Capital            Stage           Total

Issuance of common stock
<S>                                                <C>           <C>             <C>                <C>
    for cash                                       400,000       $        400    $        100       $               $       500

Net (loss)                                                                                                (269)           (269)

Balances at
    March 31, 1993                                 400,000                400             100             (269)             231

Net (loss)                                                                                                (221)           (221)

Contribution to capital                                                                   500                               500

Sale of shares in private placement                 24,600                 25             221                               246
 on September 30, 1993

Balances at
    March 31, 1994                                 424,600       $        425    $        821       $     (490)     $       756

Net (loss) (unaudited)                                                                                  (1,392)         (1,392)

Balances at
  March 31, 1995 (unaudited)                       424,600       $        425    $        821       $   (1,882)     $     (636)

Net (loss) (unaudited)                                                                                    (897)           (897)

Balances at
  March 31, 1996 (unaudited)                       424,600       $        425    $        825       $   (2,779)     $   (1,533)

Net (loss) (unaudited)                                                                                    (253)           (253)

Balances at March 31, 1997
  (unaudited)                                      424,600       $        425    $        825       $   (3,033)     $   (1,786)

Net (loss) (unaudited)                                                                                    (110)           (110)

Balances at
    March 31, 1998 (unaudited)                     424,000              2,125             825             3,142           1,896

Net (loss) (unaudited)                                                                                    (110)           (110)

Balances at
    March 31, 1998 (unaudited)                     424,600                425             825
</TABLE>
          3,252           2,006
     The accompanying notes are an integral part of these financial statements.

                                                               15

<PAGE>

<TABLE>
<CAPTION>


ST. JAMES GROUP, INC.
(A Development Stage Company)                                                                           Statements of Cash Flows




                                                                                                            CUMULATIVE
                                                                    FOR THE            FOR THE            FROM INCEPTION
                                                                     YEAR               YEAR               June 11, 1992
                                                                     ENDED              ENDED                   TO
                                                                March 31, 1999     March 31, 1998         March 31, 1999


CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                              <C>                <C>                    <C>
    Net (Loss)                                                   $      (110)       $      (110)           $     (3,252)

    Add item not requiring the use
      of cash - amortization                                                                                         263

    Increase (decrease) in accounts payable                               110                110                   2,006

    Net cash flows from operating activities                                                                       (983)

CASH FLOWS FROM INVESTING ACTIVITIES
    Organization Costs                                                                                             (263)

CASH FLOWS FROM FINANCING ACTIVITIES
    Contribution to Capital                                                                                          500
    Sale of common stock                                                                                             746
    Net Cash flows from financing activities                                                                       1,246


NET INCREASE IN CASH

CASH BALANCE AT BEGINNING OF PERIOD

CASH BALANCE AT END OF PERIOD                                    $                  $                      $
















</TABLE>









                            The  accompanying  notes are an integral part of the
financial statements.

                                                               16

<PAGE>



ST. JAMES GROUP, INC.
(A Development Stage Company)                     Notes to Financial Statements

NOTE 1      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

            The Company was incorporated under the laws of the State of Delaware
            on  June  11,  1992,   for  the  purpose  of  seeking  out  business
            opportunities,   including  acquisitions.  The  Company  is  in  the
            development stage and will be very dependent on the skills, talents,
            and abilities of management to  successfully  implement its business
            plan.  Due to the Company's  lack of capital,  it is likely that the
            Company will not be able to compete with larger and more experienced
            entities  for  business  opportunities  which are lower risk and are
            more attractive for such entities.  Business  opportunities in which
            the  Company  may  participate  will  likely  be  highly  risky  and
            speculative.  Since  inception,  the Company's  activities have been
            limited  to  organizational   matters.   Organizational   costs  are
            amortized on a straight-line basis over five years.

            The  financial  statements  as of and for the years  ended March 31,
            1999,  1998  and  1997  are  unaudited,  pursuant  to the  exemption
            provided by Rule 3-11 of Regulation S-X.

NOTE 2      CASH AND CASH EQUIVALENTS

            The Company  considers all short-term  investments  with an original
            maturity of three months or less to be cash equivalents.


NOTE 3      RELATED PARTY TRANSACTIONS

            The officer and  director of the Company  currently  serves  without
compensation.

            An officer of the  Corporation  has  advanced  certain  expenses  on
            behalf of the Company.  As of March 31, 1998 and 1999 such  expenses
            totalled  $1,896 and  $2,006.  The  Company  has given the officer a
            demand  promissory note  convertible  into shares of common stock at
            the  officer's  option,  which  is  included  in  accounts  payable,
            representing this obligation.


NOTE 4      INCOME TAXES

            The fiscal  year end of the  Company is March 31st and an income tax
            return has not been filed. However, if an income tax return had been
            filed,  the Company would have a net operating loss  carryforward of
            $3,252.


NOTE 5      STOCK OPTION PLAN

            The  Company  has  stock  option  plans  for  directors,   officers,
            employees,  advisors,  and  employees of companies  that do business
            with the Company,  which  provide for  non-qualified  and  qualified
            stock options.  The Stock Option  Committee of the Board  determines
            the option  price which cannot be less than the fair market value at
            the  date of the  grant  of 110% of the  fair  market  value  if the
            Optionee holds 10% or more of the Company's  common stock. The price
            per share of share  subject to a  Non-Qualified  Option shall not be
            less  than 85% of the fair  market  value at the date of the  grant.
            Options  generally  expire either three months after  termination of
            employment,  or ten years  after  date of grant  (five  years if the
            optionee holds 10% or more of the Company's common stock at the time
            of grant). No options were outstanding in fiscal 1999 or 1998.

                                                        17

<PAGE>


                                                    SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized April 10, 1999.


                                                           ST. JAMES GROUP, INC.


                                                           By:    /s/ Jehu Hand
                                                                  Jehu Hand
                                                                  President



        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities on April 10, 1997.



By:     /s/ Jehu Hand President, Secretary, Chief Financial Officer and Director
        Jehu Hand


                                                        18

<PAGE>