SECURITIES AND EXCHANGE COMMISSION
	                            Washington, D.C.  20549

                                   	FORM 10-K

                 	Annual Report Pursuant to Section 13 or 15(d)
	                    of the Securities Exchange Act of 1934

                    	For the Fiscal Year Ended July 31, 1998

                         	Commission File Number 0-15284

                                	J2 COMMUNICATIONS
	              (Exact name of registrant as specified in charter)
 
                        				California			    95-4053296
			         (State or Other Jurisdiction of		(I.R.S. Employer
			          Incorporation or Organization)	  Identification No.)

                     	10850 Wilshire Boulevard, Suite 1000
	                           Los Angeles, California
	                    (Address of principal executive office)

             	Registrant's telephone number, including area code
	                                (310) 474-5252

         	Securities registered pursuant to Section 12(g) of the Act:

              	(Title of each class)					(Name of each exchange
								                                  on which registered)

              	Common Stock, no par value					NASDAQ
	                      Series A Warrants						NASDAQ

Indicate by check mark whether the Registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
Registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. 
YES  X 	NO    

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 
of Regulation S-K is not contained herein, and will not 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. [ ]

As of October 26, 1998, the aggregate market value of the voting stock held by 
non-affiliates of the Registrant was approximately $1,301,000.

As of October 26, 1998, the Registrant had 1,200,000 of its common stock 
("Common Stock"), no par value, issued and outstanding.

	DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated by reference into Parts I, II or III


PART I

Safe Harbor Statement under the Private Securities Litigation Reform Act of 
1995


Certain statements in the Annual Report on Form 10-K, particularly under Items 
1 through 8, constitute "forward-looking statements" within the meaning of 
Private Securities Litigation Reform Act of 1995 (the "Reform Act").  Such 
forward-looking statements involve known and unknown risks, uncertainties, and 
other factors which may cause the actual results, performance or achievements 
of the Company to be materially different from any future results, performance 
or achievements, expressed or implied by such forward-looking statements.


ITEM 1: THE BUSINESS 

The Company was founded in March, 1986 by its Chairman of the Board and 
President, James P. Jimirro, the first President of both the Disney Channel 
and Walt Disney Home Video.  The Company was originally formed primarily to 
engage in the acquisition, development and production of entertainment feature 
film and special-interest videocassette programs, and the marketing of these 
programs in the home video sell-through market.  In 1990, the Company acquired 
National Lampoon, Inc., a publisher of a national satire and humor magazine 
and licensor of feature films.  As more fully described below, in an effort to
preserve capital the Company has significantly scaled back its operations, and
now monitors a modest staff to administer the licensing of the National Lampoon
name.  The Company is not actually engaged in any production or development
activity and instead monitors various license agents relative to this trademark.

Due to the increasing competitiveness of the videocassette market, resulting 
in declining volume and profitability, the Company has de-emphasized this 
segment of its business.  The Company expects that its videocassette business, 
which has been declining in recent years, will continue to decline, and in the 
future will not be a significant part of its operations.  The Company is now 
focusing on using the National Lampoon name in virtually every segment of the 
entertainment business.  The first significant result of this effort was 
realized with the release in February, 1993 of the feature film "National 
Lampoon's Loaded Weapon I".  This film achieved in excess of $28 million of 
theatrical revenue in its United States theatrical release.  The Company is 
participating in the film's revenue as provided by the Company's licensing 
agreement with New Line Cinema, the producer and distributor of the film.  The 
second picture under this licensed agreement, "National Lampoon's Senior 
Trip," was released in September of 1995.  The theatrical revenue from this 
film was disappointing. However, as the Company only licensed the "National 
Lampoon" name with respect to the project, it had no risk of loss if theatrical 
box-office and ancillary revenues were disappointing.  The Company intends to
continue its efforts to license the "National Lampoon" name to other producers 
of full-length motion pictures.  In fiscal 1994, a licensing agreement was 
entered into with Showtime Networks, Inc. which provided for the production 
of seven (7) movies made for initial viewing on the Showtime television channel
over three (3) years.  The Showtime Agreement expired during the fiscal year 
ending July 31, 1997 with only four made-for-cable pictures being produced and 
as such, the fifth through seventh movies were not produced.  In accordance 
with the contract, Showtime has paid the producer fees due for the fifth (5)
through seventh (7) movies as of July 31, 1998. 

On April 15, 1998 the Company entered into an agreement with International 
Family Entertainment, Inc. ("IFE"), a wholly-owned subsidiary of Fox Kids 
Worldwide, Inc., whereby IFE entered into an exclusive option, which option was
exercised on June 10, to acquire certain exclusive rights in and to the 
"National Lampoon" brand (including name, logos, and related elements).

On June 10, 1998 IFE elected to exercise that option. The rights acquired by 
IFE consist of the right to use the National Lampoon name in connection with a 
Monday through Friday half-hour comedy strip, a once-weekly movie and /or 
comedy night as well as in connection with original made-for-television movies 
and series. The first two projects resulting from this alliance are two made-
for-television motion pictures entitled "National Lampoon's Men in White" and 
"National Lampoon's Golf Punks". These two movies were broadcast on Fox Family 
Channel during the months of August and September of 1998 to favorable 
ratings. In addition, IFE's exercise of the option entitles them to four (4) 
additional, consecutive, conditional annual options to renew and extend this 
agreement through August 2003. 





RECENT DEVELOPMENTS AND MATERIAL INFORMATION


1.	Dependence on National Lampoon

	In October 1990, J2 Communications ("J2" or the "Company") acquired all 
of the outstanding stock of National Lampoon, Inc. ("NLI"), the publisher of 
the National Lampoon magazine and a developer of other film programming.  
On April 15, 1998 the Company entered into an agreement with International 
Family Entertainment, Inc. ("IFE"), a wholly owned subsidiary of Fox Kids 
Worldwide, Inc. The Company will receive a guaranteed annual fee for each 
broadcast season with annual increases for each subsequent option renewal. In 
addition to the guaranteed fees, the Company will receive contingent 
participation in revenues generated from the exploitation of original 
programming, in all media including domestic home video, network, foreign 
distribution and worldwide interactive/multimedia. The Company is a profit 
participant in these ventures and is substantially dependent on the 
performance of third parties to such agreements and upon the commercial 
success of the licensed products. 

2.	Management Contract of the Magazine

	In August 1993, the Company entered into an agreement with CR Cooper 
Publications, Inc., a magazine publisher, to print and distribute the 
magazine.  Editorial control of the magazine content remained with the 
Company.  The agreement called for the publication of a minimum of 4 issues 
during the first year of the agreement, 6 issues the second year and 10 issues 
for the third and subsequent years.  The agreement was for a period of 3 
years.  In February 1996, the agreement was terminated by the Company because 
certain minimum performance targets were not met by the Publisher.  Beginning 
with the 25th anniversary issue published in May 1996, the Company again began 
publishing the magazine. The Company's current agreement with Harvard Lampoon 
obligates the Company to publish at least one issue of the magazine a year 
with a minimum of 50,000 copies. The Company is complying with this 
obligation, but has not determined when and if it would publish more than the 
minimum requirement. The Company received a waiver from the Harvard Lampoon 
from its obligation to publish the magazine during the current fiscal year, 
but has subsequently published an issue of the magazine in October 1998.


3.	Dependence on Key Personnel

	The Company is substantially dependent on the services of James P. 
Jimirro, who serves as the Company's Chairman of the Board and President.  
Although Mr. Jimirro is party to an employment agreement with the Company, the 
loss of his services could have a material adverse effect on the Company.



NATIONAL LAMPOON OPERATIONS

NLI and its subsidiaries were acquired by J2 effective October 24, 1990 upon 
approval of the shareholders of both companies.  NL is engaged in various 
aspects of the entertainment business.  It is the publisher of National
Lampoon, a magazine of contemporary humor and satire.  NL also creates, 
develops, and has produced (but does not finance) the production of motion
pictures, television programs, and other entertainment media.  This division,
together with the prior NLI entity, is collectively referred to as "NL." 


Motion Pictures, Television and Other Entertainment Activities

Motion Pictures:  NL's motion picture activities have consisted principally of 
developing ideas for feature films, suggesting script writers, providing 
supervision of the scripting, and providing producer services in connection 
with the production of such films.  NL has not financed the development, 
production or distribution of movies, and does not maintain a development 
department. Instead, NL is typically presented with film ideas by major movie 
studios for consideration with regard to financing of development, production, 
and distribution by such studios and obtaining the right to use the "National 
Lampoon" name.  For these services, NL receives production and other fees and 
a participation in the profits, if any, of the movie which bears its name.  
After NL's first movie, "Animal House," NL's compensation arrangements for its 
comedy film projects financed and distributed by studios traditionally fell 
into a general pattern of cash fees for NL's producer services and for the use 
of the name "National Lampoon" in the film title, and a small percentage of 
the studio's "net profits" (after a certain level of revenues has been 
achieved) from the film. 

To date, NL has been involved in the production of eight feature films, 
including the highly profitable 1978 film "Animal House," co-produced by NL 
and Ivan Reitman.  This movie starred John Belushi and was financed and 
distributed by Universal Studios.  For the last five years, revenues from this 
picture have consisted mainly of NL's share of fees derived from the licensing 
of the picture by Universal for showing by various independent television 
stations, and from the sale of videocassettes.

NL's other films have included "National Lampoon's Vacation" (released in 
1983) and its sequels, "National Lampoon's European Vacation" (released in 
1985), and "National Lampoon's Christmas Vacation" (released in 1989), all 
starring Chevy Chase and Beverly D'Angelo.

NL and New Line Cinema Corporation ("New Line") entered into an agreement, 
dated as of September 11, 1991, regarding the development and production, 
financing, and distribution of up to three (3) National Lampoon motion 
pictures each at budgets not greater than $10 million within four and one-half 
years of execution of the agreement (the "New Line Agreement").  The New Line 
Agreement provided NL with an advance fee for the use of the "National 
Lampoon" name in connection with each of the theatrical motion pictures to be 
produced and additional contingent compensation based on the gross revenues 
produced by the picture.

New Line released the first film under this agreement, "National Lampoon's 
Loaded Weapon I," in February 1993.  The film grossed in excess of $28 million 
at the domestic box-office.  The second film, "National Lampoon's Senior Trip" 
was released in September, 1995 and was not a box office success.  The New 
Line agreement expired on May 10, 1996, and as such, the third motion picture 
was never produced.  

In March, 1994, the Company signed an agreement with Showtime Networks, Inc. 
("Showtime") to produce seven (7) movies over a three (3) year period to be 
aired initially on the Showtime Network or The Movie Channel.  The agreement 
provides for the payment of a license fee to National Lampoon upon the 
commencement of principal photography of each film and contingent compensation 
based on revenues the films may generate from all sources.  The Showtime 
agreement has now expired, with only four (4) made-for-cable movies produced, 
and as such, the fifth through seventh movies will not be produced.  In 
accordance with the contract, Showtime has paid the producer fees due for 
the fifth (5) through seventh (7) movies as of July 31, 1998.  Unless the 
Company licenses the rights and obtains a significant advance, revenue from
theatrical feature film rights for fiscal year ended July 31, 1999 will be
dependent on contingent compensation from previously licensed rights.  The 
results will be lower feature film rights revenues for the fiscal year ended 
July 31,1999, than in prior years. 

Television:  In July 1987 NL entered into an exclusive television agreement 
with Barris Industries, Inc. ("Barris"), a Los Angeles-based television 
production company.  Barris is a predecessor of Guber-Peter Entertainment 
Company ("GPEC"), which was acquired by Sony Pictures (formerly Columbia 
Studios).  Pursuant to the Barris Agreement, NL granted Barris the exclusive 
right to produce television programming of any kind utilizing the name 
"National Lampoon" for a term of five years.  NL had not previously been 
significantly active in creating television programming, and this agreement 
did not produce any significant television activity.

Concurrent with the acquisition of NL by J2 Communications, the exclusive 
right to produce television programming under the name "National Lampoon" was 
re-acquired by NL on October 1, 1990 from GPEC ("GPEC Agreement").  The 
purpose of this acquisition of rights was to ensure that NL had the ability to 
control the use of its name in the valuable medium of television and to 
develop comedy motion picture and other programs for broadcast in all areas of 
television distribution including network, syndication and cable.

The GPEC Agreement required the re-payment of $1,000,000 to GPEC, which was 
the consideration paid by GPEC to NL for the rights in 1987.  This sum was 
payable by NL, fifty-percent ($500,000) on execution of the contract (and so 
paid), and fifty-percent ($500,000) payable out of seventeen and one-half 
percent (17 1/2%) of the gross receipts received by NL as a result of the 
exploitation of any new television programs bearing the National Lampoon name, 
with certain minimums due on commencement of principal photography or taping 
of the applicable programs.  After this amount has been re-paid, NL shall have 
no further obligations to GPEC with respect to television.  To date, $131,000 
has been paid under the gross receipt provision of the agreement.

On April 15, 1998, the Company entered into an agreement with International
Family Entertainment, Inc. ("IFE"), a wholly-owned subsidiary of Fox Kids
Worldwide, Inc., whereby IFE entered into an exclusive option to acquire 
certain exclusive rights in and to the "National Lampoon" brand (including name,
logo, and related elements).  On June 10, 1998 IFE elected to exercise that 
option.  The rights acquired by IFE consist of the right to use the National
Lampoon name in connection with a Monday through Friday half-hour comedy
strip, a once-weekly movie and/or comedy right as well as in connection with
original made-for-television movies and series.  The first two pictures 
resulting from this alliance are two made-for-television motion pictures 
entitled "National Lampoon's Men In White" and "National Lampoon's Golf Punks".
These two movies were broadcast on Fox Family Channel during the months of
August and September of 1998 to exceptional ratings.  In addition, IFE's 
exercise of the option entitles them to four (4) additional, consecutive,
conditional annual options to renew and extend this agreement through August
2003.

Made-For-Video Movies

"National Lampoon's Last Resort", a made-for-video movie produced by Rose & 
Ruby Productions, completed filming in July, 1993.  The picture stars Corey 
Feldman & Corey Haim, and was distributed internationally by Moonstone 
Entertainment and in the U. S. by Vidmark in early 1994.

Motion Picture and Television Competition:  Motion pictures and television 
development activities are highly competitive.  NL is in competition with the 
major film studios as well as numerous independent motion picture and 
television production companies for the acquisition of literary properties, 
the services of creative and technical personnel, and available production 
financing.  NL believes it has been, and will continue to be, aided in these 
endeavors by the recognition achieved by the "National Lampoon" name and by 
the success achieved by its films, "National Lampoon's Animal House," 
"National Lampoon's Vacation," and "National Lampoon Loaded Weapon I;" 
however, NL cannot guarantee that any project will actually be produced or if 
produced, will yield the success of past projects.


Other Activities

Internet:  The company is in the early planning stages of creating it's own 
National Lampoon web site on the WorldWide Web. The site would be developed 
into a multilayered site featuring past comedy as well as current comedy 
content. It would also feature National Lampoon merchandise and past issues of 
the National Lampoon magazine issues for sale as well as other comedy 
merchandise. The site would be located at Nationallampoon.Com. on the 
Worldwide Web. 

Books:  NL continues the publication of various books, including "National 
Lampoon's Treasury of Humor" with Simon and Schuster, and four "True Facts" 
books with Contemporary Books.  Other NL books published include the third 
edition of "National Lampoon's Cartoon Book," and "National Lampoon White 
Bread Snaps".

Computer Games:  "National Lampoon's Chess Meister 5 Billion and 1," a 
computer game produced by Spectrum HoloByte, is currently available 
nationwide.  Also available  is "The Personal Daily PlanIt", a daily planner 
featuring National Lampoon's Joke of the Day, distributed by Media Vision.  In 
1995, Trimark Interactive developed and distributed the CD-ROM title "National 
Lampoon's Blind Date."  Other interactive titles being developed by National 
Lampoon include "National Lampoon Goes To Hell" and "National Lampoon I Can't 
Believe It's Not A Game Show".

NL has a number of merchandising arrangements, including a line of trading and 
post cards based upon National Lampoon magazine art.  In addition, NL has 
concluded a deal with At A Glance Landmark, which published the Company's 1998 
calendar, to distribute the 1999 NL Life Sucks! PAGE-A-DAY CALENDAR AND 
HORRORSCOPE.

Recordings:  Rhino Records continues to distribute a commemorative box set 
titled "The Best of The National Lampoon Radio Hour," a compilation of classic 
comedy from the 1970's show.

 
Publishing Operations

National Lampoon Magazine:  First published in March 1970, National Lampoon is 
distributed at newsstands, bookstores, and other retail outlets.  Its audience 
is largely young, college educated, and affluent.  Each issue of the magazine 
contains original articles, artwork, and photographs treating various matters 
in a satirical manner.

National Lampoon became a bi-monthly magazine in late 1986 with a $3.95 cover 
price with approximately 112 pages per issue.  Commencing with the March 1991 
issue, National Lampoon increased to a ten (10) times per year frequency and 
also reduced its cover price to $2.95 and lowered the page count to 84 pages. 
 However, the continued economic recession and the advent of the Gulf War 
depressed all magazine circulation and related advertising revenues.  
Consequently, beginning with the December 1991 issue, the Company reverted to 
bi-monthly issues.  In an effort to reverse the trend of NL losses over many 
years, in March 1992, the Company relocated the principal offices of National 
Lampoon, Inc. to Los Angeles, California, and closed the New York offices.  
After the April 1992 issue, NL suspended publication of National Lampoon for 
several months.  NL recommenced publication of National Lampoon with the 
spring 1993 issue.  

In August 1993 the Company entered into an agreement with CR Cooper 
Publications, Inc., a magazine publisher, to print and distribute the 
magazine.  Editorial control of the magazine content remained with the 
Company.  The agreement called for the publication of a minimum of 4 issues 
during the first year of the agreement, 6 issues the second year and 10 issues 
for the third and subsequent years.  The agreement was for a period of 3 
years; however in February 1996, the agreement was terminated by the Company 
because certain minimum performance targets were not met by the Publisher.  
Beginning with the 25th anniversary issue published in May 1996, the Company 
again began publishing the magazine.  The Company published 55,000 copies of 
the 25th Anniversary 1996 issue and 62,000 copies of the 1997 issue.  The 
Company's current agreement with Harvard Lampoon obligates the Company to 
publish at least one issue of the magazine a year with a minimum of 50,000 
copies.  The Company is complying with this obligation, but has not determined 
when and if it would publish more than the minimum requirement. The Company 
received a waiver from the Harvard Lampoon from its obligation to publish the 
magazine during the current fiscal year, but has subsequently published an 
issue of the magazine in October 1998. The Company published 53,000 copies 
of the magazine with a cover price of $4.95.


An agreement between NL and The Harvard Lampoon, Inc. provides that NL may use 
the "Lampoon" name perpetually, subject to, among other things, publication of 
the magazine at least once a year.  Under the agreement, as amended, NL pays 
The Harvard Lampoon, Inc. royalties of up to 2% of all revenues derived from 
sales of publications using the name "National Lampoon," and royalties of up 
to 2% of "pre-tax profits" (as defined in the agreement) derived from non-
publishing activities using such name. Except for this royalty arrangement, 
there is no connection between National Lampoon and The Harvard Lampoon.  The 
name "National Lampoon" is a registered trademark of the Company.  

Competition in Publishing:  The magazine publishing industry is intensely 
competitive with respect to both readership and advertising. National Lampoon 
is one of the few nationally circulated magazines directed to an adult 
audience devoted exclusively to contemporary humor and satire.  There are, 
however, a number of nationally distributed magazines devoted to contemporary 
subjects and events, some of which contain material similar to that contained 
in National Lampoon.


VIDEO OPERATIONS

The Company, which through 1993 was engaged in significant operations in the 
sell-through video market, has drastically diminished its video operations.  
The Company was currently engaged in the exploitation of "Dorf on Golf", the 
rights to which expired this year.  After such time, the Company does not 
expect that its video operations will generate any significant revenue.



EMPLOYEES

As of October 23, 1998, the Company employed four (4) employees of whom two 
(2) are full time and two (2) are part-time.


ITEM 2:  PROPERTIES

The Company leases office space of approximately 3,912 square feet at 10850 
Wilshire Boulevard, Suite 1000, Los Angeles, California 90024 for a five (5) 
year period commencing on October 1, 1995.  The Company's rental obligation is 
$6,454 per month.  The space is utilized for office space, as well as storage 
of video masters, cassettes and back issues of the National Lampoon Magazine 
and other NL archival materials.  In addition, it provides storage for legal, 
accounting and contract files related to past years for National Lampoon and 
J2 Communications.  Management considers the Company's corporate offices 
generally suitable and adequate for their intended purposes.


ITEM 3:  LEGAL PROCEEDINGS

The Company, NLI and the officers and directors of NLI became the defendants 
in a lawsuit filed in 1990 in the Superior Court of the Southern District of 
New York in regard to the acquisition of NLI by the Company.  The shareholders 
of NLI (the "Plaintiffs") filed the claim with respect to the tax treatment of 
the transaction with respect to the individual shareholders of NLI.  The 
Company entered into a settlement agreement in August 1991, which must still 
be approved by the courts, under which the Company will issue an addition 
41,667 shares of its common stock to the Plaintiffs and provide for the 
payment of attorneys' fees.  The Company has had no contact with the Plaintiff's
or its attorneys since 1991.  The value of the shares to be issued is 
presented as a liability of $203,000 as of July 31, 1998, and 1997, as the 
shares have not yet been issued and the settlement has not been approved.

On March 10, 1997 counsel for Harvard Lampoon, Inc. ("HLI") filed a demand for 
arbitration to the American Arbitration Association, asserting that the 
Company underpaid royalties under the HLI royalty agreement by approximately 
$226,000, plus unspecified late charges, for the period from July 1, 1992, 
through June 30, 1995, based on HLI's interpretation of the agreement.  By 
agreement of both parties arbitration was stayed in order to a mediation under 
the auspices of the Judicial Arbitration and Mediation Services, which took 
place on May 8th and 9th, 1997.  Settlement negotiations commenced at the 
mediation and arbitration proceedings continue to be stayed while settlement 
negotiations proceed.  If settlement is not reached, J2 will vigorously 
contest HLI's claims in arbitration.

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

None 



	PART II

ITEM 5:	MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS

a.	Stock:  The Company's Common Stock has been traded in the over-the-
counter market since October 2, 1986 under the symbol JTWO. On October 21, 
1998, the Company held a special shareholders meeting where a 3:1 reverse 
stock split was voted on and approved. In consideration of this subsequent 
event, all periods presented have been restated to retroactively reflect the 
decreased number of shares and share prices outstanding. The reverse split 
resulted in a decrease in the common shares from 3,600,000 to 1,200,000 for 
all periods presented. The following table sets forth for the periods shown, 
the high and low sales prices of the common stock during each quarterly period 
within the two most recent fiscal years, as reported by NASDAQ.

Common Stock 										
<TABLE>
<S>                                          <C>            <C>
                                     								High		         Low
Fiscal 1999:

	First Quarter (Through October 23, 1998) 	2 11/32       	 1 5/16

Fiscal 1998:

	First Quarter	                            4 19/32         2 5/8 
	Second Quarter	                           3 3/4		         1 25/32
	Third Quarter	                            1 13/16		       1 1/2
	Fourth Quarter	                           3 9/32		        2 1/16

Fiscal 1997:

	First Quarter	                            4 1/8	         	3 3/16
	Second Quarter	                           3 3/4		         2 5/8
	Third Quarter	                            3 3/32	        	2 11/32
	Fourth Quarter	                           3 21/32	        2 5/8

</TABLE>

On October 23, 1998, the closing sales price for the Common Stock was 1 5/16 
per share.  The approximate number of holders of record of Common Stock on 
that date was 551.  The Company has never paid a dividend on its Common Stock 
and presently intends to retain all earnings for use in its business. 


b.	Warrants:  The Company's Warrants were issued in connection with its 
acquisition of National Lampoon, Inc. The warrants began trading in the over-
the-counter market on October 26, 1990 under the symbol JTWOW.  

The Company decided not to extend the exercise period for its warrants,
which expired pursuant to their terms on June 30, 1998.

ITEM 6:	SELECTED FINANCIAL DATA

The selected consolidated statement of operations data for the years ended 
July 31, 1996, July 31, 1997 and 1998 and the consolidated balance sheet data 
at July 31, 1997 and 1998 are derived from the Company's consolidated 
financial statements included elsewhere in this Annual Report that have been 
audited by Arthur Andersen LLP, independent public accountants, as indicated 
in their report, which is also included elsewhere in this Annual Report.  Such 
selected consolidated financial data should be read in conjunction with those 
consolidated financial statements and the notes thereto.  The selected 
consolidated income statement data for the years ended July 31, 1994 and 1995 
are derived from audited consolidated financial statements of the Company 
which are not included herein.


Selected Consolidated Financial Data

                                               		Years ended July 31,	
<TABLE>
<S>                                     <C>          <C>          <C>        <C>          <C>

                                    	   1998	        1997	        1996	      1995	       1994
STATEMENT OF OPERATIONS DATA:
Total revenues   	                 $  868,000 	$  1,415,000	$  1,041,000	 $1,333,000	 $ 1,863,000
Costs and expenses:
Costs of revenue	                      45,000	      262,000	     259,000	    193,000	     203,000
Selling, general
  and administrative	                 765,000	      792,000	     725,000	    818,000	   1,129,000
			
Amortization of  intangible assets    240,000 	     240,000      240,000     240,000	     240,000
Income (loss) from operations	       (182,000)	     121,000	    (183,000)	    82,000	     291,000

Other income and expense:
 Settlement of royalty  and other 
  claims	                             343,000	          -    	       -    	      -         84,000
 Minority Interest in income
   of consolidated subsidiary	        (34,000)	     (82,000)	     (46,000)	   (30,000)	   (30,000)
 Interest expense                         -             -             -           -       (18,000)

Income (loss) before provision for 
(benefit from) income taxes	          127,000	       39,000	      (229,000)	   52,000	    327,000

Provision for (benefit from)
income taxes	                           6,000	        9,000	         7,000	   (14,000)	    22,000
 
NET INCOME (LOSS)	                  $ 121,000	     $ 30,000	    $ (236,000)	 $ 66,000	  $ 305,000
	
INCOME (LOSS) PER COMMON SHARE

     Basic	                            $ 0.10	       $ 0.03	       $ (0.20)	   $ 0,06	     $ 0.25
     Diluted	                          $ 0.10	       $ 0.02	       $ (0.20)	   $ 0.06	     $ 0.25

</TABLE>



		                                                  Years ended July 31,	
<TABLE>
<S>                                      <C>           <C>         <C>        <C>        <C>          

	                                        1998	         1997	       1996	      1995	     1994

BALANCE SHEET DATA:

Intangible assets	                  $3,656,000	    $3,896,000	 $4,136,000	 $4,376,000	 $4,616,000

Total assets	                       $5,962,000    	$5,473,000 	$5,367,000 	$5,667,000	 $5,801,000

Shareholders' equity	               $3,803,000	    $3,682,000 	$3,652,000 	$3,888,000	 $3,814,000

</TABLE>




ITEM 7:	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

YEAR ENDED JULY 31, 1998 VERSUS JULY 31, 1997

Total revenues for 1998 decreased $547,000 to $868,000 compared to $1,415,000 
for 1997. Movies, television and theatrical revenues decreased $348,000 
primarily due to decreased movie licensing revenue of previously licensed 
movies. Videocassette sales decreased $218,000 to $1,000 from $219,000 from 
the prior year due to the Company continuing de-emphasizing the video segment 
of its business because of declining profitability. Royalty income increased 
$49,000 from $111,000 to $160,000 from the prior year, primarily due to the
recognition of income on the balance of advance license fees upon expiration 
of the license agreements.  Publishing revenue decreased $56,000 from last 
fiscal year to zero this year due to the Company receiving a waiver from 
publishing the "National Lampoon" magazine during the current fiscal year.  
Interest income for the year increased $26,000 to $85,000 from $59,000 in the 
prior fiscal year primarily due to increased interest income recognized on 
short-term investments, as well as higher cash balances invested 
in interest bearing accounts during the current fiscal year.


Cost of movies and television decreased $27,000 to $26,000 from $53,000 in the 
prior fiscal year, primarily due to no payments being required on the "GPEC" 
rights agreement.

There was no cost of magazine due to the company obtaining a waiver from 
publishing a magazine this fiscal year.

Royalty expenses decreased $49,000 to $14,000 compared to $63,000 in 1997, 
primarily due to no royalty expense being due on the balance of advance 
license fees upon expiration of the license agreements as mentioned above. 

Selling, general and administrative expenses decreased $27,000 to $765,000 in 
the current year as compared to $792,000 in the prior year. The decrease was 
primarily due to a reduction in salary expense and insurance expense, 
partially offset by an increase in accounting and corporate expenses.

Other income of $343,000 primarily represents the reversal of previous 
accruals related to potential royalties, which were extinguished at a reduced 
amount, the current year recognition of certain unearned revenues and the 
settlement of certain accrued expenses at reduced levels.

Net income for  the current year was $121,000, equal to $.10 per diluted share 
compared to $30,000, equal to $.02 per diluted share in the prior fiscal year. 
The increase in net income was due primarily to an increase in royalty, 
interest and other income, lower general and administrative expenses and cost 
of movies and television. This was partially offset by lower movies, 
television and theatrical revenue and reduced videocassette sales.




YEAR ENDED JULY 31, 1997 VERSUS JULY 31, 1996

 Total revenues for 1997 increased $374,000 to $1,415,000 compared to 
$1,041,000 for 1996.  Movies, television and theatrical revenues increased 
$431,000 primarily due to increased movie licensing revenue of previously 
licensed movies and payment of the license fees for two Showtime movies during 
fiscal year 1997.  Videocassette sales decreased $92,000 to $219,000 from 
$311,000 from the prior year due to the company de-emphasizing the video 
segment of its business because of declining profitability.  Royalty income 
increased $5,000 to $111,000 from $106,000 from the prior year, primarily due 
to increased revenue received from a newly licensed distributor.  Publishing 
revenue increased $48,000 to $56,000 from $8,000 in the prior year due to a 
majority of revenue for the 25th anniversary issue of the National Lampoon 
magazine, which went on sale late in fiscal 1996, being recorded in fiscal 
1997, along with the fiscal 1997 magazine issue.  Interest income for the year 
decreased $18,000 to $59,000 from $77,000 in the prior fiscal year primarily 
due to a decrease in yields on short-term investment, as well as a reduction 
in the average short-term investment balance during 1997.


Cost of videocassettes sold as a percentage of sales increased to 48% in 
fiscal 1997 compared to 45% in 1996, primarily due to reductions in the sales 
price of certain videos as they are in the latter stages of their release 
pattern.

Costs of movies and television expenses increased $27,000 to $53,000 from 
$26,000 in the prior fiscal year, due primarily to additional payments 
required to be made on increased television revenue on the "GPEC" rights 
agreement.

Magazine editorial, production and distribution expense decreased $11,000 to 
$41,000 from $55,000 due primarily to last fiscal year's expense having 
included costs associated with prior editions of the magazine.

Royalty expenses increased $26,000 to $63,000 compared to $37,000 in 1996, 
primarily due to an increase in royalty income.

Selling, general and administrative expenses increased $67,000 to $792,000 in 
the current year as compared with $725,000 in the prior year.  The increase 
was primarily due to an increase in salary expense, partially offset by a 
reduction in legal and accounting expenses.

Net income for the current year was $30,000, equal to $0.02 per diluted share 
compared with a net loss of $236,000, equal to $0.20 per diluted share.  The 
increase in net income was due primarily to increase television and theatrical 
revenues, which were partially offset by a reduction in video sales.      

 


Liquidity and Capital Resources

Cash and short term investments at July 31, 1998 totaled $2,231,000, an 
increase of $729,000 from the prior year-end. 

The Company has no current plans for any significant capital expenditures in 
its current line of business and believes that its present level of cash and 
cash equivalents, augmented by internally generated funds, will provide 
sufficient cash resources through fiscal 1999.

 


The Company has made a significant investment in the "National Lampoon" name 
and other intangible assets through its acquisition of NLI.  Realization of 
these acquired assets ($3,656,000 at July 31, 1998) is dependent on the 
continued licensing of the "National Lampoon" name for use in feature films, 
video, television and audio distribution and merchandising of other 
appropriate opportunities.  The Company has received approximately $6,223,000 
in licensing revenues since the acquisition of the "National Lampoon" name in 
1990.  The Company is in the process of negotiating other licensing agreements 
and the development of other concepts, programs, etc. that could generate 
additional licensing fees in the future.  If these and other licensing 
agreements that the Company may enter into in the future do not result in 
sufficient revenues to recover these acquired intangible assets over a 
reasonable period of time, the Company's future results of operations may be 
adversely affected by a write-off of or an adjustment to these acquired 
intangible assets.

In evaluating if there has been an impairment in the value of its long-lived 
assets, the Company follows the guidelines of SFAS No. 121.  This statement 
establishes accounting standards for the impairment of long-lived assets, 
certain identifiable intangibles, and goodwill related to those assets to be 
held and used and for long-lived assets and certain identifiable intangibles 
to be disposed of.  Management has determined that through the realization of 
future licensing agreements, expected future cash flows relating to the 
intangible assets will result in the recovery of the carrying amount of such 
assets.
 

Year 2000

The Company is currently working to resolve the potential impact of the year 
2000 on the processing of date-sensitive information by the Company's 
computerized information systems. The company has recently purchased a new 
computer and software system from Dell Computer, which should be fully 
integrated by the end of the current fiscal year. The year 2000 problem is the 
result of computer programs being written using two digits (rather than four) 
to define the applicable year. Any of the Company's programs that have time-
sensitive software may recognize a date using "00" as the year 1900 rather 
than the year 2000, which could result in miscalculation or system failures. 
Based on preliminary information, costs of addressing potential problems are 
currently not expected to have a material adverse impact on the Company's 
financial position, results of operations or cash flows in future periods. 
However, if the Company, its customers or vendors are unable to resolve such 
processing issues in a timely manner, it could result in a material financial 
risk. Accordingly, the Company plans to devote the necessary resources to 
resolve all significant year 2000 issues in a timely manner.

Subsequent Events

On August 13, 1998 the Company was notified by NASDAQ that the Company's 
security was not in compliance with the new minimum bid price requirement, 
pursuant to NASD Marketplace Rule 431 (c) (04), which became effective 
February 23, 1998. As a result, the Company will be provided 90 calendar days, 
which expires November 13, 1998, in order to regain compliance if its security 
trades at or above the minimum bid price requirement of  $1.00 for at least 10 
consecutive trade days within the 90 days period which began on August 14, 
1998. If the security does not regain compliance within 90 days, NASDAQ will 
issue a delisting letter, which will identify the review procedures available 
to the company. The Company may request a review at the time, which will 
generally stay delisting, according to NASDAQ.

The Company held a Special Shareholder meeting at the Company's offices at 
10850 Wilshire Boulevard, Suite 1000, Los Angeles, California on October 21, 
1998, at 10:00 A.M. Pacific Daylight Saving Time. The purpose of the meeting 
was the election of four (4) directors to serve on the Board of Directors 
until the next annual meeting or until their successors are elected and 
quailified. In addition, to approve an amendment to the Company's Articles of 
Incorporation to effect a 1 for 3 reverse stock split of the Company's 
outstanding common stock. Shareholders of record as of  the close of business 
on September 16, 1998 were entitled to vote at this special meeting. The 
shareholders unanimously approved the 1 for 3 reverse stock split and the 
Company's stock began trading on October 26, 1998 under the symbol JTWOD for a 
tempory period of 30 days, and then will return to it's original symbol of 
JTWO.



ITEM 8:	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Index to Financial Statements of the Company is included in Item 14.

ITEM 9:	NONE

	PART III

ITEM 10:	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth below, as of the date of this filing, lists each 
director and executive officer of the Company, the year in which he first 
became a director or executive officer, and his principal occupation during 
the past five years.  Each Director is expected to hold office until the next 
annual meeting of stockholders and until his successor has been elected and 
qualified.
<TABLE>
<S>                                          <C>                  <C>
			                                                               First
Name and Office to which Elected		           Age	                Elected

James P. Jimirro		                            61	                  1986
 Chairman of the Board of Directors,
 President and Chief Executive Officer

James Fellows		                               63	                  1986
 Director

Bruce P. Vann		                               42	                  1986
 Director
	                                           	
Rudy R. Patino		                              50	                  1997
 Chief Financial Officer

Duncan Murray		                               52	                  1986
 Vice President-Marketing

John De Simio                                                                 
                                              46                   1998
 Director

</TABLE>

James P. Jimirro has been employed by the Company since its inception.  From 
1980 to 1985 he was the President of Walt Disney Telecommunications Company, 
which included serving as President of Walt Disney Home Video, a producer and 
distributor of family home video programming.  While in this position, he also 
served as Corporate Executive Vice President of Walt Disney Productions.  In 
addition, from 1983 until 1985, Mr. Jimirro served as the first President of 
The Disney Channel, a national pay cable television channel, which Mr. Jimirro 
conceived and implemented.  Mr. Jimirro continued in a consulting capacity for 
the Walt Disney Company through July, 1986.  From 1973 to 1980 he served as 
Director of International Sales and then as Executive Vice President of the 
Walt Disney Educational Media Company, a subsidiary of Walt Disney 
Productions.  Before his move to Disney, Mr. Jimirro directed international 
sales for CBS, Inc. and later, for Viacom International.    

James Fellows has been a member of the Board of Directors and the President of 
the Central Education Network, Inc., a Chicago, Illinois association of public 
television and educational associations, since 1983.  From 1962 through 1982, 
Mr. Fellows worked in a variety of positions for the National Association of 
Educational Broadcasters (NAEB) in Washington, D.C., and became its President 
and Chief Executive Officer in 1978.  NAEB was a non-profit organization 
concerned with educational and public telecommunications.  Mr. Fellows is a 
director of numerous non-profit corporations including the Educational 
Development Center in Boston, Massachusetts, a producer of written and filmed 
educational materials; the Maryland Public Broadcasting Foundation, a 
corporate fund raiser for public television; and American Children's 
Television Festival.

Bruce P. Vann has been a partner in the law firm of Kelly Lytton Mintz & Vann 
since December, 1995, and from 1989 through December 1995 was a partner with 
the law firm of Keck, Mahin & Cate and Meyer & Vann.  In all firms (located in 
Los Angeles, California), Mr. Vann has specialized in corporate and securities 
matters.  Mr. Vann also serves, on a non-exclusive basis, as Senior Vice 
President of Largo Entertainment, a subsidiary of The Victor Company of Japan.

Rudy R. Patino joined the company on August 8, 1997 as Chief Financial 
Officer.  He is a Certified Public Accountant, licensed in the State of 
California, and has worked as Chief Financial Officer and Controller for 
various entertainment companies over the last 15 years.  From 1995 to 1997 he 
was Chief Financial Officer for Prism Entertainment Corporation, a producer 
and distributor of feature motion pictures.  Prior to that, from 1986 to 1995, 
he was Vice President/Controller for Avalon Attractions, Inc. one of the 
largest live concert promoters in Southern California.   

Duncan Murray has been with the Company since August 1986.  Before that, he 
worked with The Walt Disney Company for fourteen years in a variety of 
capacities including Vice President-Sales Administration for The Disney 
Channel and Director of Sales for Walt Disney Telecommunications Company.

John De Simio has been in the entertainment side of the public relations 
business since 1976. From 1988 to 1996, Mr. De Simio was a Senior Vice 
President, Publicity/Promotion for Castle Rock Entertainment, where he oversaw 
publicity and national promotional campaigns for their theatrical and 
television productions. Before moving to Castle Rock, Mr. De Simio was 
National Publicity Director of Twentieth Century Fox Film Corporation from 
1985-1988. Mr. De Simio is presently on a disability leave due to a visual 
impairment. Mr. De Simio currently serves on the Boards of Theatre LA and The 
Broadcast Film Critics Association.

ITEM 11:	EXECUTIVE COMPENSATION

The Summary Compensation Table below includes, for each of the fiscal years 
ended July 31, 1998, 1997 and 1996, individual compensation for services to 
the Company and its subsidiaries of the Chief Executive Officer (the "Named 
Officer").



                                      	SUMMARY COMPENSATION TABLE
<TABLE>

                                      																			     Long Term Compensation
    						                    Annual Compensation                       Awards          Payouts   

<S>            <C>        <C>         <C>         <C>            <C>        <C>         <C>     <C>                        

(a)			         (b)			     (c) 				    (d)  			    (e)			         (f)	    	  (g)			      (h)	    (i)

                           									 					        Other
Name									 					                               Annual		     Restricted				 	                 All Other
and									 					                                Compen-		      Stock					            LTIP     Compen-
Principal				   			  					                        sation   	    Award(s)    Options/   Payouts  	sation
Position	  	   Year		 Salary ($)(4) 	Bonus ($)(4)  ($)(1)  	     ($)     	   SARs (#)  ($)    	  ($)   

			            1998 	    190,750			     ---		  		    (2)		       (3)	         33,333		   -	        3
James P.		     1997 	    190,750			     ---	  	  		  (2)    		   (3)		        33,333		   -	        3
Jimirro(2)	    1996 	    190,750		      --- 		       (2)	    	   (3)		        33,333		   -	        3
			

___________________

(1)	Does not include amounts of $12,000 in 1998, $12,500 in 1997, and $9,700 in 
1996 paid to Jim Jimirro who is entitled to be reimbursed for expenses 
relating to entertainment, travel and living expenses when away from home.

(2)	Does not include $6,000 in 1998, $7,000 in 1997 and $8,900 in 1996, which 
the Company paid for Mr. Jimirro's health plan.  The Company also provides Mr. 
Jimirro with a Company-owned vehicle for his use.

(3)	Does not include SAR's granted to Mr. Jimirro pursuant to his employment 
agreement. See the description of Mr. Jimirro's employment agreement under 
"Employment Agreements and Stock Option Plans" below.

(4)	Effective June 1, 1992, Mr. Jimirro reduced the amount of salary he receives 
to $190,750.  Mr. Jimirro does not expect to receive the unpaid portion unless 
there is a change in the control of the Company as defined by his employment 
agreement.  The Company has not accrued any salary or bonus for Mr. Jimirro in 
regards to the above for the fiscal years ended July 31, 1998, 1997 and 1996. 





Option Grants in Last Fiscal Year

   Shown below is information on grants of stock options pursuant to the 1994 
Stock Option Plan during the fiscal year ended July 31, 1998, to the Named 
Officer which are reflected in the Summary Compensation Table on page 17.

_______________________________________________________________________________

</TABLE>
<TABLE>
						                                                               Potential Realized Value at 
							                                                              Assigned Annual Rates of Stock 
                                                                     Price Appreciation 
                             Individual Grants in 1998		             for 7 year Option Term     

<S>                     <C>         <C>          <C>         <C>         <C>     <C>       <C>      <C>     
	                           		    Percentage
			                                of Total
			                              Options/SARs	 Exercise
		                     Options/   granted to	  or Base		                      5%                10%   	
	                       	SARS	   Employees in	 Price Per   Expiration  	Stock   Dollar     Stock   Dollar	
Name		                Granted(#)  Fiscal Year   Share($)      Date    	Price($) Gains($)  Price($) Gains($)	

James Jimirro		       33,333 (1)    52.6        $2.20 (2)  12-28-2004   $3.09   $29,600   $4.32    $70,600

</TABLE>
___________________
(1)   Options/SARS granted are immediately exercisable.

(2)   Options/SARS granted with an exercise price (or initial valuation in 
the case of SARs) equal to the closing sale price of the Common Stock as 
quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on December 28, 1997, the date of grant for Mr. Jimirro.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option 
Values

   Shown below is information with respect to (i) options exercised by the 
Named Officer pursuant to the 1994 Plan during fiscal 1998 (of which there 
were none); and (ii) unexercised options granted in fiscal 1998 and prior 
years under the 1994 Plan to the Named Officer and held by them at July 31, 
1998.  
<TABLE>
<S>                    <C>            <C>          <C>                  <C>

                                                                      Value of
							                                                               Unexercised
					                                           Unexercised		         In-the-Money
					                                           Options/SARs at      	Options/SARS at
					                                           7/31/98		             7/31/98(1)
			                Shares Acquired	    Value	   Exercisable/	         Exercisable/
Name			            on Exercise (#)	 Realized($)	Unexercisable(#)      Unexercisable($)

James Jimirro			        -0-	           -0-        300,000/0	           $34,262/0

</TABLE>
(1)  Based on the closing sale price as quoted on NASDAQ on that date.

Director Compensation

Directors, with the exception of Mr. Jimirro, receive 1,333 stock options per 
year exercisable at the then market price as compensation for their services 
as a director.  

Compensation Committee Interlocks and Insider Participation

The Company  does not have a Compensation Committee or similar Board 
committee. The compensation of Mr. Jimirro as Chief Executive Officer ("CEO") 
is determined under the provisions of Mr. Jimirro's employment agreement with 
the Company, which was approved by the Board of Directors in 1994. Jim 
Jimirro, James Fellows, Bruce Vann and John De Simio were each directors of 
the Company during fiscal 1998.




EMPLOYMENT AGREEMENTS AND STOCK OPTIONS

In 1994, the Company entered into a new employment agreement with James P. 
Jimirro, effective July 1, 1994 (the "1994 Agreement").  Under the 1994 
Agreement, which has a term of seven years, Mr. Jimirro will receive a base 
salary plus an incentive bonus following the end of each fiscal year during 
which Mr. Jimirro is employed by the Company.  Mr. Jimirro's base salary for 
the first year will be $475,000 and will be adjusted annually by the greater 
of (i) 9% or (ii) 5% plus the percentage increase in the CPI Index.  Effective 
June 1, 1992, the President reduced the amount of salary he receives to 
$191,000.  The President does not expect to receive the unpaid portion unless 
there is a change in the control of the Company as defined by the agreement. 

Mr. Jimirro's bonus is to be an amount equal to 5% of the Company's earnings 
in excess of $500,000 and up to $1 million; plus 6% of the next $1 million of 
earnings; plus 7% of the next $1 million of earnings; plus 8% of the next $2 
million of earnings; and plus 9% of the next $2 million of earnings. If 
earnings exceed $7 million, then Executive shall, in addition to foregoing 
compensation, be entitled to such additional incentive compensation as may be 
determined by the Board based upon Executive's services and performance on 
behalf of the Company and the profitability of the Company.

The 1994 Agreement also provides that, on the date of each annual meeting of 
shareholders during its term, Mr. Jimirro will be granted stock options with 
respect to 16,667 shares of Common Stock and stock appreciation rights (SARs) 
with respect to 16,667 shares of Common Stock.  The exercise price of each 
option and the initial valuation of each SAR will be equal to the fair market 
value of the Common Stock of the Company at the date of the grant.  The 
options and SARs will be immediately exercisable non-statutory stock options, 
will have a term of seven years, and will be subject to all other terms 
identical to those contained in the Company's 1991 Employee Stock Option 
Incentive Plan (the "1991 Plan").  The 1991 Plan specifically provides for the 
grant of stock options and SARs to Mr. Jimirro in accordance with his 
employment agreement.  The 1994 Agreement provides that if Mr. Jimirro's 
employment is terminated without cause, or is terminated by Mr. Jimirro for 
cause or under certain other circumstances, including a change in control of 
the Company (as defined below), then Mr. Jimirro generally is entitled to 
receive all payments and other benefits which would be due under the 1994 
Agreement during its entire term; provided, that such payments would be 
reduced to the extent that such payments would constitute an "excess parachute 
payment" under the Internal Revenue Code of 1986, or any successor law 
applicable to payments of severance compensation to Mr. Jimirro.  A "change in 
control" would be deemed to occur if (a) any person or group becomes the 
direct or indirect owner of securities with 25% or more of the combined voting 
power of the Company's then outstanding securities, (b) if there is a 
significant change in the composition of the Board of Directors of the 
Company, (c) upon the sale of all or substantially all of the assets of the 
Company, (d) upon the merger of the Company with any other corporations if the 
shareholders of the Company prior to the merger owned less than 75% of the 
voting stock of the corporation surviving the merger or (e) in certain other 
events.  In addition to the foregoing benefits, Mr. Jimirro has the right, if 
he terminates his employment under certain circumstances (including following 
a change in control or a breach of the 1994 Agreement by the Company) to serve 
as a consultant to the Company for a period of five years (the "Consulting 
Period").  During the Consulting Period, Mr. Jimirro would be required to 
devote no more than 600 hours per year to the affairs of the Company, and 
would receive 50% of his salary as in effect on the date of termination of his 
employment.  As a result of the foregoing, the Company would incur substantial 
expenses if Mr. Jimirro terminates his employment with the Company following a 
change in control of the Company, which may make the Company a less attractive 
acquisition candidate.  The 1994 Agreement also provides Mr. Jimirro with 
certain registration rights pursuant to which, beginning in 1992, the Company 
will be required upon the request of Mr. Jimirro to register the sale of 
shares of the Company's Common Stock owned by Mr. Jimirro under the Securities 
Act of 1933.  The 1994 Agreement is terminable by the Company only "for cause" 
as defined therein.

Any employee may participate in any bonus plan which may be established, as 
well all Employee Stock Option Plans.



In October of 1995 the Financial Accounting Standards Board issued SFAS No. 
123.  This statement establishes accounting standards for stock-based employee 
compensation plans.  This statement will become effective for the consolidated 
financial statements in fiscal 1998 and encourages, but does not require, a 
fair-value based method of accounting for employee stock options or similar 
equity instruments.  Management does not believe the impact of the provisions 
of the Statement on its assets will be material.


Stock Option Plans

In 1994 the Board of Directors approved an Employee Stock Option Plan and a 
Stock Option Plan for Non-Employee Directors.  Both Plans were approved by 
Shareholders at the Shareholders' Meeting held March 2, 1995.

The Employee Stock Option Plan is to be administered by a Committee consisting 
of at least two members of the Board of Directors.  All prior options granted 
under previous stock option plans are to be replaced by options granted under 
the 1994 Plan.

The 1994 Plan provides for a maximum number of options to be granted to be the 
greater of 358,333 or 30% of the Company's outstanding shares less 41,667 
shares reserved for issuance under the Non-Employee Director Plan.

The term of the options granted shall not exceed 10 years and the exercise 
price shall be equal to 100% of the fair market value of the common stock on 
the date of grant.

The Non-Employee Directors Stock Option Plan is to be administered by a 
Committee consisting of at least two members of the Board of Directors.  All 
prior options granted under previous stock option plans are to be replaced by 
options granted under the 1994 Plan.

The 1994 Plan provided for a maximum number of 41,667 options to be granted 
and further provides for the granting of 1,333 option shares per year to each 
Non-Employee Director as compensation for his services.

A maximum of 41,667 shares may be issued under the Plan at an exercise price 
equal to the fair market value of the stock on the date of grant.  All options 
are to be immediately exercisable.
   

ITEM 12:	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the expected beneficial ownership of Common 
Stock as of October 23, 1998. The table shows the beneficial ownership to each 
person known to J2 who beneficially own more than 5% of the shares of J2 
Common Stock, each current director, and all directors and officers as a 
group. Except as otherwise indicated, J2 believes that the beneficial owners 
of the Common Stock listed below, based on information furnished by such 
owners, have sole investment and voting power with respect to such shares, 
subject to community property laws where applicable.


<TABLE>
<S>                                 <C>          <C>
				                              Shares	      Percent
				                           Beneficially	     of
	                               			Owned       	Class  


                              				Number      	Percent

James P. Jimirro (2)(3)		        375,333        26.5%
James Fellows (2)(4)	             13,000          (1)
Bruce P. Vann ( 2)(5)	            11,333          (1)
All directors and executive 
officers as a group 
 (5 persons)		   	               410,833        29.0%
         
</TABLE>
(1)	Less than 1 percent.

(2)	The address for each shareholder listed is 10850 Wilshire Boulevard, 
Suite 1000, Los Angeles, California 90024.

(3)	Includes 166,667 stock options granted under the Company's Stock Option 
Plan pursuant to Mr. Jimirro's Executive Employment Agreement.

(4)	Includes 13,000 shares of Common Stock purchasable under the Company's 
Stock Option Plan.

(5)	Includes 11,333 shares of Common Stock purchasable under the Company's 
Stock Option Plan.


ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


	Bruce P. Vann and the law firms of Kelly Lytton Mintz & Vann LLP, of 
which he is a partner, performed services as attorneys for the Company.  For 
the fiscal year ended July 31, 1998, Kelly & Lytton Mintz & Vann LLP earned 
approximately $7,000. Mr. Vann is a director of the Company and, as such, he 
(or his law firm) may receive additional compensation for services rendered to 
the Company.





	PART IV

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

(a)  The following documents are filed as a part of this annual report:

     1.	  	Financial Statements:

		The financial statements listed in the accompanying Index to 
Financial Statements are filed as part of this annual report.

     2.		Exhibits:

		The exhibits listed below are filed as a part of this annual 
report.

		 2.1	Acquisition Agreement dated as of July 31, 1990 between the 
Company, J2 Acquisition Corp., National Lampoon, Inc., 
Daniel L. Grodnik, and Tim Matheson, and related Agreement 
and Plan of Merger.  (2)

		 3.1	Restated Articles of Incorporation.  (3)

		 3.2	By-laws of the Company.  (3)

   3.3 Certificate of amendment to Articles of Incorporation

		 4.1	Warrant Agreement dated as of October 15, 1990 between the 
Company and U.S. Stock of Transfer Corp. (2)

		10.1	Amendment to Employment Agreement between the Company and 
James P. Jimirro, dated as of May 26, 1988.  (3)

		10.2	Agreement between National Lampoon, Inc. and New Line Cinema 
Corporation, dated as of April 20, 1990.  (2)

		10.3	Lease between the Company and Pacific Properties.  (5)

		10.4	Amended lease between the Company and Pacific Properties.  
(4)

		10.5	Second amended lease between the Company and Pacific 
Properties. (1)

	        	10.6	"National Lampoon" License Agreement 
Termination between National Lampoon, Inc. and Guber-Peters 
Entertainment Company, previously named Barris Industries, 
Inc., dated October 1, 1990. (1)
			
	        	10.7	Showtime Agreement (8)
	
	        	10.8	Jim Jimirro Employment Agreement (8)

		10.9	1994 Stock Option Plan for Employees (9)

		10.10	1994 Stock Option Plan for Non-Employee Directors (9)





	         21.1	List of subsidiaries of  Registrant (8)

			(1)  Filed as exhibit to the Company's Annual Report on Form 
10-K for the Fiscal Year ended July 31, 1991.

			(2)  Filed as an exhibit to Company Registration Statement 
on Form S-4, File No. 33-36203 
	
			(3)  Filed as an exhibit to that certain Form S-1 
Registration Statement of the Company as filed with the 
Securities and Exchange Commission on July 28, 1986, 
September 22, 1986 and October 2, 1986 (The "S-1 
Registration Statement").

			(4)  Filed as an exhibit to the Company's Annual Report on 
Form 10-K for the Fiscal Year Ended July 31, 1988.

			(5)  Filed as an exhibit to the Company's Annual Report of 
Form 10-K for the Fiscal Year Ended as of July 31, 1989.

			(6)  Filed as an exhibit to that certain Registration 
Statement of the Company filed with the Securities and 
Exchange Commission on May 28, 1993.
 
			(7)  Filed as an exhibit to that certain Registration 
Statement of the Company on Form S-1 filed with the 
Securities and Exchange Commission on October 28, 1993.

			(8)  Filed as an Exhibit to the Company's Annual Report on 
Form 10-K for the Fiscal year Ended July 31, 1995.
		
(9) Filed as an Exhibit to that certain 
Registration Statement of the Company on Form 
 S-8 filed with the Securities and Exchange Commission on May 
8, 1995.
(10) 





                                         	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 in the City of Los Angeles,
State of California, on the 26th day of October, 1998.
<TABLE>
<S>                                                 <C>


                                                 J2 COMMUNICATIONS

October 26, 1998                          By:/s/ James P. Jimirro
                                                 JAMES P. JIMIRRO
                                          	      Chairman of the Board,
                                                 President, and Chief
                                                 Executive Officer (Principal 
	                                                 Executive Officer)

</TABLE>




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 in the City of Los Angeles,
State of California, on the 26th day of October, 1998.
<TABLE>
<S>                                <C>                          <C>

Signatures	                        Title                         Date

/s/ James P. Jimirro	         Chairman of the Board,        October 26, 1998
JAMES P. JIMIRRO	             President, Chief Executive
	                             Officer (Principal 
	                             Executive Officer)
	                             and Director

/s/ Rudy R. Patino            Chief Financial Officer       October 26, 1998
RUDY R. PATINO	               (Principal Financial Officer)

/s/ James Fellows   	         Director                      October 26, 1998
JAMES FELLOWS

/s/ Bruce P. Vann   	         Director                      October 26, 1998
BRUCE P. VANN

/s/ John De Simio             Director                      October 26, 1998
JOHN DE SIMI

</TABLE>


EXHIBIT 21.1


J2 COMMUNICATIONS
<TABLE>
<S>                                          <C>
                                                                     
SUBSIDIARIES	                               % OWNED

NATIONAL LAMPOON, INC.                         100
NL COMMUNICATIONS, INC.                        100
STUDIO 21 PRODUCTIONS, INC.                    100
NATIONAL LAMPOON PLAYERS                       100

</TABLE>








J2 COMMUNICATIONS AND SUBSIDIARIES

FINANCIAL STATEMENTS
AS OF JULY 31, 1998 AND 1997
TOGETHER WITH AUDITOR'S REPORT




J2 COMMUNICATIONS AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

JULY 31, 1998




REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS


FINANCIAL STATEMENTS:

  Consolidated Balance Sheets as of
    July 31, 1998 and 1997

  Consolidated Statements of Operations 
    for each of the three years in the period ended July 31, 1998

  Consolidated Statements of Shareholders' Equity 
    for each of the three years in the period ended July 31, 1998

  Consolidated Statements of Cash Flows 
    for each of the three years in the period ended July 31, 1998

  Notes to Consolidated Financial Statements













REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To J2 Communications:

We have audited the accompanying consolidated balance sheets of J2 
Communications and subsidiaries (a California corporation) as of July 31, 1998 
and 1997, and the related consolidated statements of operations, shareholders' 
equity and cash flows for each of the three years in the period ended July 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 consolidated 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 management, as well as evaluating the 
overall financial statement presentation.  We believe that our audit provides 
a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, a significant 
portion of the Company's assets is composed of certain intangible assets.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of J2 Communications and 
subsidiaries as of July 31, 1998 and 1997, and the results of their operations 
and their cash flows for the years then ended in conformity with generally 
accepted accounting principles.







October  9, 1998
Los Angeles, California






                             J2 COMMUNICATIONS AND SUBSIDIARIES


                                CONSOLIDATED BALANCE SHEETS

                                AS OF JULY 31, 1998 AND 1997



                                           ASSETS
<TABLE>
<S>                                                    <C>          <C>

                                                   	   1998     	   1997   

CURRENT ASSETS:
  Cash and cash equivalents	                        $  879,000	  $  641,000
  Short-term investments, at cost	                   1,352,000	     861,000
  Other current assets                                 	55,000	      75,000
	                                                   ----------	  ----------
          Total current assets	                      2,286,000	   1,577,000
                                                   	----------	  ----------

NONCURRENT ASSETS:
  Intangible assets, less accumulated
    amortization of $2,309,000 and
    $2,069,000 in 1998 and 1997, respectively	       3,656,000	   3,896,000
	Other noncurrent assets	                               20,000         	-    
                                                   	----------	  ----------
          Total noncurrent assets	                   3,676,000	   3,896,000
	                                                   ----------	  ----------

TOTAL ASSETS	                                       $5,962,000	  $5,473,000
	                                                   ==========	  ==========
</TABLE>


The accompanying notes are an integral part of these consolidated balance 
sheets.





                               J2 COMMUNICATIONS AND SUBSIDIARIES


                                   CONSOLIDATED BALANCE SHEETS

                                   AS OF JULY 31, 1998 AND 1997



                               LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>                                                   <C>            <C>      

                                                  	   1998   	       1997   

CURRENT LIABILITIES:
  Accounts payable	                               $  154,000	     $  130,000
  Accrued expenses	                                  846,000	      1,128,000
  Deferred revenues	                                 800,000	        208,000
  Income taxes payable	                               38,000	         38,000
  Common stock payable                              	203,000	        203,000
  Minority Interest	                                 118,000	         84,000
	                                                 ----------	     ----------
          Total current liabilities	               2,159,000       1,791,000
	                                                 ----------	     ----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
    Preferred stock, no par value:
      Authorized--2,000,000 shares,
      none issued and outstanding
        in 1998 and 1997	-    	-    
    Common stock, no par value:
      Authorized--15,000,000 shares,
      issued and outstanding--
        1,200,000 shares in 1998
        and 1997	                                  8,661,000	      8,654,000
    Note receivable on common stock	                (128,000)	      (121,000)
    Deficit	                                      (4,730,000)	    (4,851,000)
	                                                 ----------	     ----------
          Total shareholders' equity	              3,803,000	      3,682,000
	                                                 ----------	     ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	       $5,962,000	     $5,473,000
	                                                 ==========	     ==========

</TABLE>







The accompanying notes are an integral part of these consolidated balance 
sheets.




                           J2 COMMUNICATIONS AND SUBSIDIARIES


                         CONSOLIDATED STATEMENTS OF OPERATIONS

            FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JULY 31, 1998
<TABLE>
<S>                                         <C>           <C>           <C>

                                       	    1998    	     1997     	   1996   
REVENUES:
  Movies, television and theatrical	    $  622,000	   $  970,000	  $  539,000
  Videocassette sales	                       1,000	      219,000	     311,000
  Royalty income	                          160,000	      111,000	     106,000
  Publishing	                                  -   	      56,000	       8,000
  Interest	                                 85,000	       59,000	      77,000
	                                       ----------	   ----------	  ----------
          Total revenues	                  868,000	    1,415,000	   1,041,000
	                                       ----------	   ----------	  ----------
EXPENSES:
  Costs of movies and television	           26,000	       53,000	      26,000
Cost of videocassettes sold	                 5,000	      105,000	     141,000
Royalty expense	                            14,000	       63,000	      37,000
  Magazine editorial, production and
    Distribution                               -	         41,000      	55,000
  Selling, general and administrative	     765,000	      792,000	     725,000
  Amortization of intangible assets	       240,000	      240,000     	240,000
	                                       ----------	   ----------	  ----------
          Total expenses	                1,050,000	    1,294,000	   1,224,000
	                                       ----------	   ----------	  ----------

OTHER INCOME (EXPENSE)	                    343,000	          -   	        -   
	                                       ----------   	----------	  ----------
          Income (loss) from 	
            consolidated operations	       161,000	      121,000	    (183,000)

MINORITY INTEREST IN INCOME OF
  CONSOLIDATED SUBSIDIARY	                 (34,000)	     (82,000)	    (46,000)
	                                       ----------	   ----------	  ----------
          Income (loss) before 
            provision for income taxes     127,000	       39,000	    (229,000)

PROVISION FOR INCOME TAXES	                  6,000	        9,000	       7,000
	                                       ----------	   ----------	  ----------
NET INCOME (LOSS)                      	$  121,000	   $   30,000	  $ (236,000)
	                                       ==========	   ==========	  ==========
INCOME (LOSS) PER COMMON SHARE:

  Basic	                                $     0.10   	$     0.03  	$   (0.20)
	                                       ==========	   ==========	  ==========
  Diluted	                              $     0.10	   $     0.02	  $   (0.20)
                                       	==========	   ==========	  ==========



WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING

  Basic	                                 1,200,000	    1,200,000	   1,200,000
	                                       ==========	   ==========	  ==========
  Diluted	                               1,212,347	    1,214,937	   1,200,000
                                       	==========	   ==========	  ==========

</TABLE>
	


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



                               J2 COMMUNICATIONS AND SUBSIDIARIES


                        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JULY 31, 1998
<TABLE>
<S>                                        <C>           <C>          <C>         <C>          <C>    


                                                                   Notes
	                                             Common Stock	        Receivable	
	                                        ------------------------	 on Common
	                                          Shares 	     Amount  	  Stock    	    Deficit  		  Total   

BALANCES, July 31, 1995	                 1,200,000	    8,643,000	  (110,000)	  (4,645,000)	 3,888,000

  Accrued interest on notes receivable	        -    	      5,000	    (5,000)	        -    	       -    
  Net loss	                                    -    	        -    	     -  	     (236,000)	  (236,000)
	                                        ---------	   ----------	  ---------	  -----------	 -----------
BALANCES, July 31, 1996	                 1,200,000	    8,648,000	  (115,000)	  (4,881,000)	 3,652,000

  Accrued interest on notes receivable	        -    	      6,000	    (6,000)	        -    	      -    
  Net income	                                  -    	        -    	     -    	     30,000	     30,000
	                                        ---------	   ----------	  ---------	  -----------	 -----------
BALANCES, July 31, 1997	                 1,200,000	    8,654,000	   (121,000)  (4,851,000)	 3,682,000

  Accrued interest on notes receivable	        -    	      7,000	     (7,000)	       -    	      -    
  Net income	                                  -    	        -    	      -    	   121,000	    121,000
                                        	---------	   ----------	   ---------	 -----------	 -----------
BALANCES, July 31, 1998	                 1,200,000	   $8,661,000	  $(128,000) $(4,730,000)	$3,803,000
                                        	=========	   ==========	   =========	 ===========	 ===========

</TABLE>




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





                               J2 COMMUNICATIONS AND SUBSIDIARIES


                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JULY 31, 1998
<TABLE>
<S>                                              <C>         <C>           <C>

                                             	   1998   	    1997   	     1996   

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)	                        $ 121,000	    $   30,000	  $  (236,000)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    (used in) operating activities:
      Amortization of intangible assets	      240,000	       240,000	      240,000
      Minority interest in income of
        Consolidated subsidiary               	34,000	        82,000	       46,000
      Changes in assets and liabilities
        Accounts payable	                      24,000	        18,000	        3,000
        Accrued expenses 	                   (282,000)	      (19,000)	     (33,000)
        Accrued income taxes	                     -    	         -    	      7,000
        Deferred revenues	                    592,000	        (5,000)	       4,000
        Other	                                 20,000    	    22,000	      (61,000)
                                          	----------	    ----------	    ----------
          Net cash provided by (used in)
            operating activities	             749,000	       368,000	      (30,000)
                                          	----------	    ----------	    ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of short-term investments	      (1,641,000)	   (1,053,000)	  (1,349,000)
  Sale of short-term investments	           1,150,000	     1,206,000	    1,289,000
  Distribution to minority shareholders	          -    	         -    	    (91,000)
	Deposit on Equipment	                        (20,000)	          -    	        -    
	                                          ----------	    ----------	    ----------
          Net cash (used in) provided by 
            investing activities	            (511,000)	      153,000	     (151,000)
                                          	----------	    ----------	    ----------

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS	                               238,000	       521,000	     (181,000)
	
CASH AND CASH EQUIVALENTS,
  beginning of year	                          641,000	       120,000	      301,000
                                          	----------	    ----------	    ----------
CASH AND CASH EQUIVALENTS,
  end of year	                             $  879,000	    $  641,000	   $  120,000
                                          	==========	    ==========	    ==========

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION--
    Cash paid during the year for
      income taxes	                        $    6,000	    $    9,000	   $     2,000
                                          	==========	    ==========	    ==========


</TABLE>



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




J2 COMMUNICATIONS AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 1998




1.	Summary of Significant Accounting Policies

	Organization and Principles of Consolidation

J2 Communications (the "Company"), a California Corporation, was formed 
in March, 1986, and was primarily engaged in the acquisition, 
development and production of entertainment and special-interest 
videocassette programs and the marketing, distribution and licensing of 
these programs for retail sale in the home video market.  In fiscal 
1991, the Company acquired all of the outstanding shares of National 
Lampoon Inc. ("NLI").  NLI was incorporated in 1967 and was primarily 
engaged in various aspects of the publishing and entertainment 
industries.  In December, 1992, in consideration for the default of 
certain intercompany notes from NLI to the Company, NLI assigned the 
rights to the majority of its assets in full satisfaction of the notes. 
 Included in these assets was NLI's 100 percent ownership interest in NL 
Communications, Inc., and Heavy Metal, Inc., which, upon this 
assignment, became subsidiaries of the Company.

Currently, the Company is primarily engaged in the licensing of the name 
"National Lampoon" in a variety of areas including motion pictures, home 
video, television, publishing, and other entertainment media.  The 
Company's revenues and income have and will continue to fluctuate based 
on the size, nature and timing of transactions whereby its names and 
trademarks are licensed.  

The consolidated financial statements include the accounts of the 
Company and its majority owned subsidiaries.  All significant 
intercompany accounts and transactions have been eliminated.

Cash Equivalents

Cash equivalents include certificates of deposit with original maturity 
dates of three months or less.

Short-Term Investments

In accordance with the provisions of Statement of Financial Accounting 
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt 
and Equity Securities," the Company determines the appropriate 
classification of marketable securities at the time of purchase and 
reevaluates such designation at each balance sheet date.  Marketable 
securities have been classified as held-to-maturity and are carried at 
cost.



Revenue Recognition

The Company recognizes licensing revenues based upon information 
provided by the licensee, with the exception of non-refundable advances 
from the licensing of the "National Lampoon" name, which are recognized 
when received.  Revenues from the sale of videocassettes, net of 
estimated provisions for sales returns (which are not material for any 
period presented), are recognized when the units are shipped.  Advances 
for future sales of videocassettes are deferred until the units are 
shipped.  Publishing revenues include magazine sales and revenue from 
advertising included in the magazines.  Single copy magazine sales are 
recognized as income in the month the issue becomes available for sale 
at the newsstand.  Subscription revenues are apportioned equally over 
the subscription period.  Advertising revenues is recognized 
concurrently with the recognition of magazine sales.

Intangible Assets

Intangible assets consist primarily of the right to license the 
"National Lampoon" name and are being amortized straight-line over a 
twenty-five year period.  Management continually evaluates whether 
events and circumstances have occurred that indicate the remaining 
estimated useful life of intangible assets may warrant revision or that 
the remaining balance of intangible assets may not be recoverable.  
Factors that would indicate the occurrence of such events or 
circumstances include current period operating or cash flow losses 
combined with a history of operating or cash flow losses, a projection 
or forecast that demonstrates continuing losses, or the inability of the 
Company to renew, extend or replace existing contracts as they expire, 
including licensing of the "National Lampoon" name.  When factors 
indicate that intangible assets should be evaluated for possible 
impairment, the Company uses an estimate of the related business's 
undiscounted net income over the remaining life of the intangible assets 
in measuring whether the intangible assets are recoverable.

The Company has made a significant investment in the "National Lampoon" 
name and other intangible assets through its acquisition of NLI.  
Realization of these acquired assets is dependent on the continued 
licensing of the "National Lampoon" name for use in feature films, 
video, television and audio distribution and merchandising or other 
appropriate opportunities.  The Company has received approximately 
$6,223,000 in licensing revenues since the acquisition of the "National 
Lampoon" name in 1990.  The Company is in the process of negotiating 
other licensing agreements and the development of concepts, programs, 
and other opportunities that could generate additional licensing fees in 
the future.  If these and other licensing agreements that the Company 
may enter into in the future do not result in sufficient revenues to 
recover these acquired intangible assets over a reasonable period of 
time, the Company's future results of operations may be adversely 
affected by a write-off of or an adjustment to these acquired intangible 
assets.

In evaluating if there has been an impairment in the value of its long-
lived assets, the Company follows the guidelines of SFAS No. 121.  This 
statement establishes accounting standards for the impairment of long-
lived assets, certain identifiable intangibles, and goodwill related to 
those assets to be held and used and for long-lived assets and certain 
identifiable intangibles to be disposed of. Management has determined 
that through the realization of future licensing agreements, expected 
future cash flows relating to the intangible asset will result in the 
recovery of the carrying amount of such asset.

Per Share Information

The Company has adopted SFAS No. 128, "Earnings Per Share", effective 
for the quarter-ended January 31, 1998.  All prior period EPS data 
presented has been restated to conform with the provisions of this 
statement. The adoption of SFAS No. 128 had no impact on diluted 
earnings per share for any periods presented.  

On October 21, 1998, the Company held a special shareholders meeting 
where a 3:1 reverse stock split was voted on and approved.  In 
consideration of this subsequent event, all periods presented have been 
restated to retroactively reflect the decreased number of shares 
outstanding. 

A summary of the shares used to compute earnings per share is as 
follows:
<TABLE>
<S>                                    <C>          <C>           <C>   	

                                    Year-ended   Year-ended   Year-ended
                                     July 1998    July 1997    July 1996

Weighted average common shares 
used to compute basic EPS            1,200,000    1,200,000    1,200,000

Stock Options                           12,347       14,937          -    
                                    ----------    ---------    ---------

Weighted average common shares 
used to compute diluted EPS          1,212,347    1,214,937    1,200,000
                                    ==========   ==========   ==========

</TABLE>

Income Taxes

Deferred income tax assets and liabilities are computed annually for 
differences between the financial statement and tax basis of assets and 
liabilities that will result in taxable or deductible amounts in the 
future.  Such deferred income tax asset and liability computations are 
based on enacted tax laws and rates applicable to periods in which the 
differences are expected to affect taxable income.  Valuation allowances 
are established when necessary to reduce deferred tax assets to the 
amount expected to be realized.  Income tax expense is the tax payable 
or refundable for the period plus or minus the change during the period 
in deferred tax assets and liabilities.



Stock-Based Compensation

During 1997, the Company adopted SFAS No. 123.  This statement 
establishes accounting standards for stock-based employee compensation 
plans.  This statement encourages, but does not require, a fair-value 
based method of accounting for employee stock options or similar equity 
instruments. The adoption of the statement did not have a material 
effect on the consolidated financial statements.

Use of Estimates

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

New Financial Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued 
SFAS No. 130, "Reporting Comprehensive Income" and Statement of 
Financial Accounting Standards No. 131, "Disclosure about Segments of An 
Enterprise and Related Information" which are effective for the 
financial statements for periods beginning after December 15, 1997.  The 
adoption of these statements will not have a material effect on the 
consolidated financial statements.

Reclassifications

Certain items in the 1997 and 1996 financial statements have been 
reclassified to conform with the 1998 presentation.

2.	Short-Term Investments

Short-term investments consist of United States Treasury bills and notes 
with original maturities of between three and twelve months.  The 
following is an analysis of short-term investments:
<TABLE>
<S>                                           <C>           <C>
	                                            1998   	      1997  

US Government obligations, cost	          $1,352,000	    $861,000
Gross unrealized holding gains	               12,000	      26,000
	                                         ----------	  ----------
US Government obligations, fair value	    $1,364,000	    $887,000
	                                         ==========	  ==========

</TABLE>

No provision has been made for the change in market value for these 
investments, as the Company intends to hold them until maturity.  In 
determining realized net gains, the cost of the securities sold is based on 
specific identification.



3.	Deferred Revenues

Deferred revenues consist of the following:
<TABLE>
<S>                                                <C>          <C>

                                                   1998  	      1997  
		
	Deferred videocassette revenues	                $   -   	    $126,000
	Unearned subscription revenues	                     -   	      82,000
	Deferred television revenues	                    800,000	         -   
                                               		--------	    --------
	                                               	$800,000	    $208,000
		                                               ========	    ========
</TABLE>

4.    Accrued Expenses

Accrued expenses consist of the following:

<TABLE>
<S>                                                 <C>          <C>    
                                                   1998  	       1997  
		
	Accrued Royalties	                             $  312,000	   $  499,000
	Reserve for contingent payment on 
	  sale of stock	                                  158,000	      158,000
	Deferred salary	                                  189,000	      189,000
	Stock appreciation rights                         	17,000       	37,000
	Legal expenses and other                         	170,000	      245,000
		                                               ---------	    ---------
		                                              $  846,000	   $1,128,000
	                                      	         =========	    =========
</TABLE>

Certain royalties and other expenses accrued in previous years were settled in 
fiscal year 1998 at reduced levels.  The reduction in these accruals is 
reflected in other income (expense) in the accompanying consolidated statement 
of operations.  

5.	Commitments and Contingencies

	Made-For-Cable Agreement

	In March 1994, the Company signed an agreement with Showtime Networks 
Inc. ("Showtime") to produce seven movies over a three year period to be 
aired initially on the Showtime Network or The Movie Channel.  The 
agreement provides for the payment of a license fee to National Lampoon 
upon the commencement of principal photography of each film and 
contingent compensation based on revenues the films may generate from 
all sources.  The Showtime agreement has now expired, with only four 
made-for-cable movies produced, and as such, the fifth through seventh 
movies will not be produced. Showtime has paid the producer fees due for 
all movies as of July 31, 1998.

Revenue recognized under this agreement totaled $300,000, $300,000, and 
$150,000 for the years ended July 31, 1998, 1997, and 1996, 
respectively.



In April 1998, the Company entered into a $800,000 agreement with 
International Family Entertainment, Inc. ("IFE"), whereby IFE has 
certain exclusive rights to the "National Lampoon" brand (including 
name, logos, and related elements), in connection with US television 
series and made-for-TV movies during the 1998-99 telecast season.  IFE 
has the option to extend this agreement for an additional four years, 
with an increase of 7-1/2% annually.  As the $800,000 annual fee was 
received by J2 Communications in June 1998 for the television season 
beginning in August 1998, the Company deferred this income until fiscal 
year 1999.

	Motion Picture Agreement

NLI and New Line Cinema Corporation ("New Line") entered into an 
agreement, effective September 11, 1991, regarding the development, 
production, financing and distribution of three "National Lampoon" 
motion pictures.  The agreement provided NLI with a non-refundable 
advance of $375,000 upon the execution of the agreement.  The agreement 
was subsequently amended to extend its term through April 1, 1996.

The compensation to be received by NLI as a result of the use of its 
name is $250,000 for each of three motion pictures (payable on 
commencement of principal photography of the applicable film) plus 
2-1/2 percent of distributors' gross receipts, as defined from all media 
in connection with the motion pictures.  Revenues recognized under this 
agreement totaled $84,000, $118,000 and $166,000 for the years ended 
July 31, 1998, 1997 and 1996, respectively.

As of April 1, 1996, New Line had failed to produce the third motion 
picture due under the agreement, which was not extended further.

Reserve for Contract Payment on Sale of Stock

The Company has its videocassettes for the domestic market duplicated 
primarily by an independent duplication company, Technicolor 
Videocassette, Inc. ("Technicolor"), which warehouses the videocassettes 
and fulfills and ships orders for the Company.  In April 1993, pursuant 
to a settlement agreement regarding an outstanding balance, the Company 
issued to Technicolor 157,000 shares of its common stock (equivalent to 
52,333 shares after the reverse stock split) valued at $176,000, and a 
note in the amount of $87,000 to satisfy obligations owed to 
Technicolor.  The Company paid the balance of the note in full during 
fiscal 1995.  The agreement provides for an additional cash payment in 
the event that such common stock is sold, within a specified time 
period, for less than $2 per share (equivalent to $6 after the reverse 
split).  The Company has recorded a liability, included in accrued 
expenses, at July 31, 1998 and 1997, in the amount of $158,000, as a 
reserve against such contingent payments.

Joint Venture

As part of the acquisition of NLI, the Company acquired a 75 percent 
interest in a joint venture, which only operations consist of revenues 
received from the licensing of a certain "National Lampoon" motion 
picture.  The minority interest's share in the joint venture's revenue 
is deducted from movies, television and theatrical revenue.  Total 
revenues received by the joint venture related to this motion picture 
were $124,000, $328,000, and $184,000 for each of the three years in the 
period ended July 31, 1998.  Of this revenue the minority interest's 
share totaled $34,000, $82,000, and $46,000, respectively.

Leases

The Company is obligated under an operating lease expiring on September 
30, 2000, for its office facility in Los Angeles, California.  The 
facility lease includes certain provisions for rent adjustments based 
upon changes in the lessor's operating costs and increases in the 
Consumer Price Index.

The Company is obligated under an operating lease expiring in September 
of 2002 for equipment located at its office facility.

The Company is also obligated under an operating lease expiring in 
November of 1999 for an automobile leased on behalf of an employee of 
the Company.

The Company is committed to future minimum lease payments for the 
following years:
<TABLE>
<S>                <C>             <C>           <C>

                 Building        Equipment       Total 
1999               86,000          9,000        94,000
2000               89,000          2,000        91,000
2001               15,000          2,000        17,000
2002                 -             2,000         	-	
	                --------	       -------	    	--------
Total            $190,000        $15,000      $202,000
                 ========        =======      ========

</TABLE>

Rent expense totaled $89,000 and $79,000 for the years ended July 31, 
1998 and 1997, respectively, and $79,000, net of sublease income of 
$5,000 for the year ended July 31, 1996.

Equipment lease expense totaled $2,000, $8,000, and $18,000 for the 
years ended July 31, 1998, 1997 and 1996, respectively.

Royalty Agreements

Pursuant to a royalty agreement between NLI and The Harvard Lampoon, 
Inc. ("HLI"), NLI is required to pay HLI a royalty of up to 2 percent on 
all revenues derived from sales of any magazine or other publication 
using the name "Lampoon" as part of its title and a royalty of up to 
2 percent of pretax profits, as defined in the agreement, on non-
publishing activities using such name.  Royalties payable under this 
agreement totaled $13,000, $19,000, and $11,000 for the years ended 
July 31, 1998, 1997, and 1996, respectively.

The Company has entered into various royalty agreements with the 
producers of videocassettes distributed by the Company.  The Company is 
required to pay a royalty, according to each individual agreement, of a 
percentage of gross receipts, less certain expenses.  Royalty expense 
under these agreements totaled $2,000, $45,000 and $26,000 for the years 
ended July 31, 1998, 1997, and 1996, respectively.

GPEC Agreement

In 1987, NLI sold the exclusive rights to produce television programming 
utilizing the name "National Lampoon" to Guber-Peter Entertainment 
Company ("GPEC").  In 1991, under agreement with GPEC, NLI reacquired 
this right for $1,000,000, of which $500,000 was paid on execution of 
the agreement.  The remaining $500,000 was payable out of the gross 
receipts of television programming, if any.  To date, $131,000 has been 
paid under the gross receipts provision of the agreement.

Employment Agreement

The Company has entered into an employment agreement dated July 1, 1994, 
with its President and Chief Executive Officer.  The agreement is for 
seven years and provides annual base compensation of $475,000, with 
annual increases of the greater of 9 percent or 5 percent plus the 
percentage increase in the Consumer Price Index.  Previously, the 
President had reduced the amount of salary he receives to $191,000.  The 
President does not expect to receive the difference between the amount 
received and the amount provided for under the agreement unless there is 
a change in control of the Company, as defined by the agreement.

In addition, an annual bonus is payable to the President if the 
Company's pretax income exceeds specified levels.  The amount is based 
on pretax earnings of the Company ranging from 5 percent to 9 percent 
over certain minimums.  If earnings exceed $7,000,000, the President 
shall be entitled to such incentive compensation, as may be determined 
by the Board of Directors based upon the President's service and 
performance on behalf of the Company and the profitability of the 
Company.  A bonus of $100,000 was earned during the year ended July 31, 
1995.  No bonus was earned in 1998, 1997 or 1996.  Deferred bonuses for 
the President, included in accrued expenses, totaled $100,000 at July 
31, 1998 and 1997.  In addition, certain officers have deferred salary 
of $89,000 at July 31, 1998 and 1997, also included in accrued expenses.

The Company has also granted the President options to purchase 
16,667 shares of its common stock and 16,667 stock appreciation rights 
(see Note 7) for each year of his employment contract.  The price for 
each will be based on the fair value of the stock at the date of 
issuance.

Litigation

	The Company, NLI and the officers and directors of NLI became the defendants 
in a lawsuit in regard to the acquisition of NLI by the Company.  The 
shareholders of NLI (the "Plaintiffs") filed the claim in respect to the 
tax treatment of the transaction to the individual shareholders of NLI. 
 The Company entered into a settlement agreement in August 1991, which 
must still be approved by the courts, under which the Company will issue 
an additional 41,667 shares of its common stock to the Plaintiffs and 
for the payment of attorneys' fees.  The value of the shares to be paid 
has been accounted for as a liability of $203,000 at July 31, 1998, 
1997, and 1996 as the shares have not been issued and the settlement has 
not been approved.

On August 20, 1996, counsel for HLI filed a demand for arbitration with 
the American Arbitration Association, asserting that the Company 
underpaid royalties payable under the HLI royalty agreement by 
approximately $226,000, plus unspecified late charges, for the period 
July 1, 1992, through June 30, 1995, based upon HLI's interpretation of 
the agreement.  By agreement of both parties arbitration has been stayed 
and the dispute is currently under mediation.  Settlement discussions 
are continuing.  Management believes that this claim will not have a 
material effect on the consolidated financial statements.

6.	Notes Receivable on Common Stock

	In 1986, the Company issued 800,000 shares of common stock (equivalent 
to 266,667 shares after the reverse stock split) to certain of its 
officers and directors pursuant to its Restated Stock Purchase Plan.  
The shares were issued with 50 percent of the purchase price payable at 
the time of issuance and the remainder due in five years.  The unpaid 
balance is due from the Company's President and Chief Executive Officer 
and bears interest at the rate of 10 percent, under promissory notes 
secured by the stock in favor of the Company.

7.	Stock Options and Stock Appreciation Rights

	Stock Option Plans

In March, 1995, shareholders approved the 1994 Employee Stock Option 
Plan and the 1994 Option Plan for Non-Employee Directors.  These plans 
replaced the 1991 Stock Option Plan.  All stock options subject to these 
plans are granted with an exercise price equivalent to the fair market 
value of the common stock at the time of the grant, except that in the 
case of the incentive stock options granted to a holder of 10 percent or 
more of the outstanding shares of common stock, such exercise price may 
not be less than 110 percent of the fair market value and may not be 
exercisable after the expiration of five years, versus ten years for 
regular stock options.  

A summary of the stock options outstanding is below:
<TABLE>
<S>                                 <C>           <C>             <C>


                                  Number of	     Option		     Weighted Average 
                                  	Options		     Price	        Exercise Price
                               	  Outstanding	   Range    	    Per Share  

 Balance, July 31, 1995	            177,000		   $1.68 - $4.44	     $3.27
	             Granted	               21,000	    $3.24 - $3.57	     $3.30
		                                 --------	    -------------  --------------
 Balance, July 31, 1996	            198,000	    $1.68 - $4.44	     $3.30
	             Granted	               38,000	    $2.64 - $3.39	     $3.00
	            Canceled	              (23,000)	   $3.18 - $3.57	     $3.39
		                                 --------	    -------------  --------------
 Balance, July 31, 1997	            213,000	    $1.68 - $4.44	     $3.24
              Granted	               44,000     $1.68 - $3.00	     $2.10
	            Canceled	               (8,000)    $2.63 - $3.19	     $3.09
		                                 --------	    -------------  --------------
 Balance, July 31, 1998	            249,000	    $1.68 - $4.44		    $3.03
		                                 ========	    =============	 ==============

</TABLE>

Of the options outstanding as of July 31, 1998, 1997, and 1996, 214,000, 
192,000, and 188,000, respectively, were exercisable with a weighted average 
exercise price of $3.18, $3.27, and $3.30, respectively.  The weighted average 
remaining contractual life of the options outstanding as of July 31, 1998 was 
2.62 years.

The Company has adopted Statement of Financial Accounting Standards No. 123, 
"Accounting for Stock Based Compensation" issued October 1995.  In accordance 
with provisions of SFAS No.123, the Company applies APB Opinion 25 and related 
interpretations in accounting for its stock option plans and, accordingly, 
does not recognize compensation cost.  If the Company had elected to recognize 
compensation cost based on the fair value of the options granted at grant date 
as prescribed by SFAS No. 123, net income and earnings per share would have 
been reduced to the pro forma amounts indicated in the table below:
<TABLE>

                                                   Years ended July 31,
		     	                                           --------------------
<S>                                                  <C>            <C>                 
			                                                 1998	          1997

Net income (loss)-as reported	 	                  	$121,000	      $30,000
Net income-pro-forma	                              $ 76,000	      $ 9,000
Basic Earnings (loss) per share
as reported	                                       $   0.10	      $  0.03
Diluted Earnings (loss) per share
as reported	                                       $   0.10	      $  0.02
Basic Earnings per share-pro-forma	                $   0.06	      $  0.01
Diluted Earnings per share-pro-forma	              $   0.06	      $  0.01	

</TABLE>

Because the SFAS No. 123 method of accounting has not been applied to options 
granted prior to August 1, 1995, the resulting pro-forma compensation cost may 
not be representative of the cost to be expected in future years.

The fair value of each option grant is estimated on the date of grant 
using the Black-Scholes option pricing model with the following 
assumptions:

     <TABLE>
     <S>                                   <C>


	Expected dividend yield	                  0.00%
	Expected stock price volatility	         79.84%
	Risk free interest rate	                  5.83%
	Expected life of options	                 6.89 years

   </TABLE>
The weighted average fair value of options granted during fiscal 1998 
and 1997 is $1.50 and $1.08, respectively.

Warrants

In connection with its acquisition of NLI in 1990, the Company issued 
594,333 Series A warrants (including 49,000 warrants issued to certain 
creditors).  The warrants expired on December 31, 1997. 

Stock Appreciation Rights

The President and Chief Executive Officer of the Company has stock 
appreciation rights which entitle the officer to receive cash equal to 
the difference between the fair market value and the appreciation base 
of the rights when they are exercised.  As of July 31, 1998 and 1997, 
appreciation in these rights amounted to approximately $17,000 and 
$37,000.  This amount has been included as an accrued liability in the 
accompanying consolidated balance sheets.

At July 31, 1998, a total of 133,333 rights were outstanding with 
exercise prices of between $1.68 and $4.44 per share.

8.	Related Party Transactions

	Legal fees of $7,000, $3,000 and $12,000, included in selling, general 
and administrative expenses, were incurred during fiscal 1998, 1997 and 
1996, respectively, for services from legal firms, one of whose partners 
is a director of the Company.

	See Note 6 for discussion of a note receivable from the Company's 
President and Chief Executive Officer.



9.	Income Taxes

	The provision for income taxes is comprised as follows:

<TABLE>
<S>                                      <C>          <C>          <C>
	                                       1998  	      1997      	  1996  

	Current:
	  State	                              $6,000	      $9,000	      $7,000
	  Federal	                               -  	         -  	         -  
	Adjustment to valuation
	  allowance:
	  State	                                 -           	-           	-  
		                                    -------	     -------     	-------
                                     		$6,000      	$9,000      	$7,000
		                                    =======	     =======	     =======

</TABLE>

A reconciliation between the statutory federal rate and the Company's 
effective rate follows:

<TABLE>
<S>                                      <C>          <C>          <C>
	                                       1998      	  1997      	  1996  

	Statutory federal
	  income tax rate (benefit)	            34%	         34%	        (34)%
	State income taxes	                      7	          19           	3
	Benefit of unrecognized prior
	  year losses	                        (190)	       (185)         	48
	Amortization of intangible 
	  assets	                               64	         173	          36
	Other	                                  92         	(22)	        (50)
		                                  -------	      -------	     -------
	Effective rate                          	7%	         19%          	3%
		                                  =======	      =======	     =======

</TABLE>
	
At July 31, 1998, the tax effect of deductible timing differences and 
carryforwards is comprised of the following:

   <TABLE>
   <S>                                          <C>
	Net operating loss carryforwards	           $507,000
	Accrued liabilities and contingencies	       136,000
	Royalty reserves	                            131,000
	Deferred income	                             320,000
		                                        -----------
	                                          	1,094,000
	Valuation allowance	                      (1,094,000)
		                                        -----------
	Net deferred tax asset	                         -    
		                                        ===========

</TABLE>

	At July 31, 1998, the Company had available for federal income tax 
purposes net operating loss carryforwards of approximately $1,268,000, 
expiring at various dates through 2011.



10.	Major Customers

During the year ended July 31, 1998, the Company received $300,000 in 
revenues from two motion picture licensees representing 25% of total 
revenues.  During the year ended July 31, 1997, the Company received 
$300,000 in revenues from a motion picture licensee representing 24% of 
total revenues.  During the year ended July 31, 1996, the Company 
received $166,000 and $150,000 from two motion picture licensees 
representing 17% and 15% of total revenues.





EXHBIT 3.3


                          CERTIFICATE OF AMENDMENT
                                      TO
                         ARTICLES OF INCORPORATION
                                      OF
                             J2 COMMUNICATIONS

The undersigned, James P. Jimirro, the Chairman of the Board, President and 
Chief Executive Officer, and Rudy Patino, the Secretary, of J2 Communications,
a corporation duly organized and existing under the laws of the State of 
California (the "Company"), do hereby certify:

  1.  That they are the Chairman of the Board, President and Chief Executive
      Officer and Secretary, respectively, of the Company.

  2.  Article IV of the Company's Restated Articles of Incorporation is 
      hereby amended to read in its entirety as follows:

  "IV. Capital.

  (a) The corporation is authorized to issue two (2) classes of shares 
      designated as "Preferred Stock" and "Common Stock" respectively.  The
      number of shares of Preferred Stock authorized to be issued is 15 millon
      (15,000,000).

  (b) Upon a Certificate of Amendment to this Restated Articles of 
      Incorporation, as amended, becoming effective pusuant to California
      General Corporations Law, and without any further action on the part of
      the Company General Corporations Law, and without any further action on
      the part of the Company or its shareholders, each three (3) shares of
      issued and outstanding shares of Common Stock shall be combined into
      one (1) outstanding share of Common Stock.  Each shareholder who would
      otherwise be entitled to receive a fractional share shall receive a
      whole share of Common Stock at no additional cost.

  3.  The foregoing amendment of the articles of incorporation has been duly 
      approved by the board of directors of the Company.

  4.  The foregoing amendment of the articles of incorporation has been duly
      approved by the required vote of shareholders in accordance with Section
      902 of the Corporations Code.  There are no outstanding shares of
      preferred stock.  The total number of outstanding shares of Common Stock
      of the corporation is 3,599,990.  The number of shares voting in favor
      of the amendment was 3,038,536 shares, which amount equals or exceeds 
      the vote required.  The percentage vote required was more than
      50%.

     We further declare under penalty of prejury under the laws of the State 
   of California that the matters set forth in this certificate are true and
   correct of our knowledge.


                                                 ___________________________ 
                                                 JAMES P. JIMIRRO, President
                                                 And Chief Executive Officer

   Dated:  October 21, 1998                      ___________________________
                                                 RUDY PATINO, Secretary