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, 1997

	                         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 24, 1997, the aggregate market value of the voting 
stock held by non-affiliates of the Registrant was approximately 
$3,438,000.

As of October 24, 1997, the Registrant had 3,599,990 shares 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.



SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

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.





	                              PART I


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.

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 licenses the 
"National Lampoon" name and has no risk of loss if theatrical 
boxoffice revenues do not meet expectation.  The Company does not 
expect any significant contingent income from this film.  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 provides for the production of 
seven (7) movies made for initial viewing on the Showtime 
television channel over three (3) years.  Four made-for-cable 
pictures had been produced under this arrangement as of the 
fiscal year ended July 31, 1997.  As per the contract, Showtime 
has paid the producer fees due for five (5) movies as of July 31, 
1997.  The producer fees due for the sixth (6) and seventh (7) 
movies will be paid in the fiscal year ended July 31, 1998.  The 
Company is currently seeking to replace the Showtime license 
agreement with a comparable entity that produces made-for-cable 
movies under a similar licensing arrangement.





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.  Although substantial sums 
were expended by the Company in an attempt to return the magazine 
publishing operations to profitability, the Company was unable to 
achieve this objective.  On December 23, 1992, as the sole 
secured creditor of NLI, J2 foreclosed against all of NLI's 
assets and the "National Lampoon" trademark.  After this 
foreclosure, NLI was left with no remaining assets, although the 
Company has continued to exploit the trademark.  The Company 
anticipates that a majority of future revenue will be dependent 
on exploiting the "National Lampoon" name.  The Company is 
subject to several agreements, including a feature film agreement 
with New Line Cinema which led to the production of "National 
Lampoon's Loaded Weapon I" and "National Lampoon's Senior Trip," 
and an agreement with Showtime Networks, Inc. regarding movies 
made for cable television.  The first movie made under this 
latter agreement was entitled "National Lampoon's Attack of the 
5'2" Women" which first aired in August 1994.  The second movie, 
"National Lampoon's Favorite Deadly  Sins", was aired in 
November, 1995.  The third movie, "National Lampoon's Dad's Week 
Off", aired in March 1997 and the fourth movie, "National 
Lampoon's The Don's Analyst", aired in September 1997, both on 
Showtime's affiliated network, The Movie Channel.  The Showtime 
agreement has now expired, with only four (4) made-for-cable 
movies produced, and as such, the fifth thru seventh movies will 
not be produced.  As per the contract, Showtime has paid the 
producer fees due for five (5) movies as of July 31, 1997.  The 
producer fees due for the sixth (6) and seventh (7) movies will 
be paid in the fiscal year ended July 31, 1998.  The Company is 
currently seeking to replace the Showtime license agreement with 
a comparable entity that produces made-for-cable movies under a 
similar licensing arrangement.  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.

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.  In 
December 1992, J2 foreclosed on all of the assets of NLI.  Since 
that time, J2 has used the assets it acquired in such foreclosure 
in a separate division.  This division, together with the prior 
NLI entity, is collectively referred to as "NL."

General

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.


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.  Unless the Company licenses the rights and 
obtains a significant advance, revenue from theatrical feature 
film rights for fiscal year ended July 31, 1998 will be dependent 
on contingent compensation from previously licensed rights.  The 
results will be lower feature film rights revenue for the fiscal 
year ended July 31, 1998, than in prior years.

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.  As per the contract, 
Showtime has paid the producer fees due for five (5) movies as of 
July 31, 1997.  The producer fees due for the sixth (6) and 
seventh (7) movies will be paid in the fiscal year ended July 31, 
1998.  The Company is currently seeking to replace the Showtime 
license agreement with a comparable entity that produces made-
for-cable movies under a similar licensing arrangement.

In the event that the Company does not replace the Showtime 
agreement with a comparable arrangement, filmed entertainment 
revenues could be negatively impacted.

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 l, 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 receipts provision of the 
agreement.

In 1997 NL entered into an agreement with Western International 
Syndication to develop a television awards spoof programs.  In 
addition, NL is currently in negotiation with a major supplier of 
children's television programming to develop an animated 
children's television series.


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 great 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:  In August 1997, National Lampoon entered into an 
agreement with Internet Ventures Inc. to develop a National 
Lampoon site on the Worldwide Web.

As of October 1997, the Company began negotiations with On-Line 
Entertainment Network, Inc. (a subsidiary of Global Net Systems, 
Ltd.) to develop and distribute audio comedy programming over the 
Internet on a pay-per-listen basis.  The Company believes that if 
an agreement is consummated, the site will develop into a multi-
layered site featuring pre-recorded material (including the 
National Lampoon Radio Hour archives), new serialized 
programming, live on-line comedy performances, and general comedy 
merchandising.

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 is in negotiations 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 has released a commemorative box 
titled The Best of The National Lampoon Radio Hour, a compilation 
of classic comedy from the 1970's show.

Theme Restaurants:  National Lampoon continuing to explore the 
possibility of developing the "National Lampoon Cafe", a chain of 
restaurants with a comedy theme.  Should the "National Lampoon 
Cafe" be funded, constructed and open to the public, it will be 
operating in a very competitive environment, therefore, there is 
no assurance that the Cafe would be successful.


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.

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 occasionally 
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 24, 1997, the Company employed six (6) employees of 
whom three (3) are full time and three (3) 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 125,000 shares of its common stock to the 
Plaintiffs and provide for the payment of attorneys' fees.  The 
value of the shares to be issued is presented as a liability of 
$203,000 as of July 31, 1997, and 1996, as the shares have not 
yet been issued and the settlement has not been approved.

NLI had a motion picture development and consulting agreement 
with Matty Simmons, a former officer of NLI.  In November 1992, 
Matty Simmons Productions, Inc. and Matty Simmons (collectively 
"Simmons") filed a complaint against the Company alleging breach 
of contract.  In December 1993, this litigation was settled.  The 
terms of the settlement agreement provide for the Company to pay 
Simmons a percentage (not to exceed $240,000 in total) of any 
amounts earned by the Company from certain previously released 
National Lampoon films.  As of the fiscal year ended July 31, 
1997, the Company has paid Matty Simmons the total amount owed 
under the terms of the settlement agreement.

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.  The following table sets forth for the periods shown, the 
high and low bid prices as reported by NASDAQ.  The bid prices 
reflect interdealer prices without retail mark-ups, mark-downs or 
commissions and may not necessarily represent actual 
transactions.

Common Stock 
<TABLE>
<S>								                                    <C>		         <C>
								                                      High		         Low
Fiscal 1998:

	First Quarter (Through October 24, 1997)     1 17/32       	  7/8

Fiscal 1997:

	First Quarter	                                1 5/16		     1 1/16 
	Second Quarter	                               1 3/16		       7/8
	Third Quarter	                                 15/16		      25/32
	Fourth Quarter	                               1 7/32		     1 3/16

Fiscal 1996:

	First Quarter	                                 1 1/2		       1
	Second Quarter	                                1 5/8		       1 3/16
	Third Quarter	                                 1 15/32		     1 1/32
	Fourth Quarter	                                1 3/16		      1 1/16
</TABLE>	


	
On October 24, 1997, the closing bid price for the Common Stock 
was 1 5/32  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 following table sets forth for the 
period indicated, the high and low bid prices reflect interdealer 
prices without retail mark-ups, mark-downs or commissions and may 
not necessarily represent actual transactions.

Warrants
<TABLE>	                                                            
<S>                                            <C>           <C>
			                                           High		         Low
Fiscal 1998:

	First Quarter (through October 24, 1997)	    11/32		        1/16

Fiscal 1997:

	First Quarter 	                               3/8		          5/16
	Second Quarter	                               9/32		         9/32
	Third Quarter	                                7/32		         1/16
	Fourth Quarter	                               3/16		         1/16

Fiscal 1996:

	First Quarter  	                              3/8		           1/4
	Second Quarter	                               3/8		           5/16
	Third Quarter 	                               3/8		           7/32
	Fourth Quarter	                               7/32		          3/16


</TABLE>

The approximate number of holders of record of Warrants are 180 
as of October 24, 1997, although management has been advised that 
the number of beneficial holders exceeds 1,000.


ITEM 6:	SELECTED FINANCIAL DATA

The selected consolidated statement of operations data for the 
years ended July 31, 1995, July 31, 1996 and 1997 and the 
consolidated balance sheet data at July 31, 1996 and 1997 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, 1993 and 1994 
are derived from audited consolidated financial statements of the 
Company which are not included herein.


	                             Selected Consolidated Financial Data

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

   				                                1997		        1996      		1995		      1994		    1993
STATEMENT OF OPERATIONS DATA:
Total revenues   			              $1,356,000	   $  964,000	  $1,284,000	  $1,848,000	 $ 1,726,000	
Costs and expenses:        		
Costs of revenue			                  262,000	      259,000	     193,000      203,000	   1,078,000	
Selling, general
  and administrative			              792,000	      725,000	     818,000	   1,129,000    2,234,000
			
Amortization of intangible assets		  240,000	      240,000      240,000      240,000      307,000
Income (loss) from operations			      62,000      (260,000)	     33,000      276,000	  (1,893,000)  

Other income:
 Settlement of IRS claims			      	     -       	     -	             -	    	    -         181,000      
 Settlement of royalty claims			        -		           -		            -	       84,000	     374,000      
 Interest income				                  59,000	       77,000	      49,000	      15,000       19,000  
 Minority Interest in income
   of consolidated subsidiary			  	  (82,000)      (46,000)     (30,000)     (30,000)     (33,000)
 Interest expense					                  -  	           -             -       (18,000)	    (18,000)
		
Income (loss) before provision for 
(benefit from) income taxes and 
extra-ordinary incom			    	          39,000	      (229,000)     52,000      327,000	  (1,370,000)
Provision for (benefit from)			
income taxes					                      9,000	         7,000 	   (14,000)      22,000	       9,000

Income (loss) before extraordinary
 item						                           30,000 	     (236,000) 	   66,000	     305,000   (1,379,000)
Extraordinary item - troubled debt
 restructuring					                       -  	           -          -   	        -   	     69,000

NET INCOME (LOSS) 				              $ 30,000     $ (236,000)    $ 66,000 	 $ 305,000  $(1,310,000)   

INCOME (LOSS) PER COMMON SHARE  
  Income (Loss) before 
    extraordinary income		           $  0.01      $   (0.07)     $  0.02     $  0.09      $ (0.43)
  Extraordinary income             			                     	                                 0.02 	
  Net income (loss) 				             $  0.01 	    $   (0.07)     $  0.02	    $  0.09      $ (0.41)  
</TABLE>



		
		                                                  YEAR ENDED JULY 31
<TABLE>
<S>						                                <C>               <C>         <C>         <C>         <C>
						                                  1997   	          1996   	    1995   	    1994   	    1993   

BALANCE SHEET DATA:       
	
Intangible assets					             $3,896,000	       $4,136,000	  $4,376,000	  $4,616,000    $ 4,856,000

Total assets					                  $5,473,000	       $5,367,000  	$5,667,000	  $5,801,000    $ 5,653,000	

Shareholders' equity				           $3,682,000	       $3,652,000	  $3,888,000	  $3,814,000    $ 3,262,000	

</TABLE>




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


RESULTS OF OPERATIONS

YEAR ENDED JULY 31, 1997 VERSUS JULY 31, 1996

Total revenues for 1997 increased $392,000 to $1,356,000 compared 
to $964,000 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 $20,000 to $65,000 from $45,000 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.  Other 
income fell to $46,000 in 1997 from $61,000 in the prior year 
1996.

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.

Interest and other 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.

Net income for the current year was $30,000, equal to $0.01 per 
share compared with a net loss of $236,000, equal to $0.07 per 
share.  The increase in net income was due primarily to increased 
television and theatrical revenues which were partially offset by 
a reduction in video sales.




YEAR ENDED JULY 31, 1996 VERSUS JULY 31, 1995

Total revenues for the year were $964,000 compared with 
$1,284,000 in the prior year.  Movies, television and theatrical 
revenues were $539,000 compared with $736,000 in the prior year. 
 In the prior year, payments under a movie licensing agreement of 
$430,000 were received which were significantly higher than the 
$166,000 received in the current year.  Video sales of $311,000 
were reduced from $336,000 recorded in 1995.  Royalty income from 
video licensing fell from $83,000 in the prior year to $45,000 in 
the current year.  In 1995, a payment from a video licenses of 
$40,000 was received which related to revenues from prior years. 
 The Company has de-emphasized the video segment of its business 
due to declining profitability.  Other income fell to $61,000 
from $129,000 in the prior year.  In 1995 there was a payment of 
$50,000 received from a National Lampoon Audio product that did 
not recur in the current year.

Cost of videocassettes sold as a percentage of sales increased to 
45% in fiscal 1996 compared with 31% in 1995 due primarily to 
reductions in the sales price of certain films in the current 
period as they are in the latter stages of their release period. 

Cost of movies and television expenses remained unchanged between 
fiscal years 1996 versus 1995 primarily due to a fixed percentage 
payment made per agreement on certain television revenues, which 
was received in the same amounts in the current and prior fiscal 
years.

Cost of magazine primarily covers costs associated with prior 
editions of the magazine.

Royalty expenses for fiscal 1996 decreased $25,000 to $37,000 
compared to $62,000 in 1995, primarily due to a settlement 
between the Company and a producer of a certain video which 
settlement reduced royalty expenses by $20,000.

Selling, general and administrative expenses were $725,000 in the 
current year as compared with $818,000 in the corresponding prior 
period.  The decrease primarily reflects a reduction in salary 
related costs of $179,000, offset in part by an increase in legal 
expenses of $98,000.

The net loss for the current year was $236,000 equal to $0.07 per 
share compared with net income of $66,000 in the prior year, 
equal to $0.02 per share.  The loss was due to sharply lower 
revenues, higher costs associated with publishing of the 
magazine, and higher legal expenses offset in part by lower 
salary costs as discussed above.


Liquidity and Capital Resources

Cash and short term investments at July 31, 1997 totaled 
$1,502,000, an increase of $368,000 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 1998.

The Company is considering establishing a restaurant chain to be 
called "National Lampoon Cafe."  Should it enter this new line of 
business, significant capital would be required.



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 ($3,896,000 at July 
31, 1997) 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 $5,583,000 in licensing revenues (including 
revenues received in connection with an agreement for the 
licensing of the name for three feature films - see Note 4) 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.
 

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		                            60	               1986
 Chairman of the Board of Directors,
 President and Chief Executive Officer

James Fellows		                               62 	              1986
 Director

Bruce P. Vann		                               41 	              1986
 Director

Rudy R. Patino		                              49 	              1997
 Chief Financial Officer

Duncan Murray		                               51 	              1986
 Vice President-Marketing
</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.


ITEM 11:	EXECUTIVE COMPENSATION

The Summary Compensation Table below includes, for each of the 
fiscal years ended July 31, 1997, 1996 and 1995, individual 
compensation for services to the Company and its subsidiaries of 
the Chief Executive Officer (the "Named Officer").

<TABLE>

	                                    SUMMARY COMPENSATION 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 ($)(5) 	Bonus ($)(5)   ($)(1)  	 ($)     	 SARs (#)   ($)    	 ($)   

			        1997		   190,750			      ---		        (2)		   (3)		      100,000		   -	        -
James P.		 1996		   190,750    			  ---	  	      (2)		   (3)		      100,000		   -	        -
Jimirro(2)	1995 		  190,750			    100,000(4)	    (2)		   (3)		      100,000		   -	        -
			
</TABLE>
___________________

(1)	Does not include amounts of $12,500 in 1997, $9,700 in 1996, and 
$9,800 in 1995 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 $7,000 in 1997, $8,900 in 1996 and $12,500 in 
1995 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)	The bonus for 1995 was accrued but not paid.

(5)	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 year ended July 31, 1996 and 1997. 





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, 1997, to the Named Officer which are reflected in the Summary 
Compensation Table on page 17.

___________________________________________________________________________
<TABLE>
						                                                                  Potential Realized Value at Assigned 
                                                                        Annual Rates of Stock 
					 	                                                                 Price Appreciation
			                      Individual Grants in 1997		                    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		     100,000(1)      63.7         1.066       12-28-2003    $1.51   $44,400    $2.08    $108,400

</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, 1996, 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 1997 (of which there were none); and (ii) unexercised 
options granted in fiscal 1997 and prior years under the 1994 
Plan to the Named Officer and held by them at July 31, 1997.  
<TABLE>
<S>                   <C>              <C>               <C>                <C>
							                                                                    Value of
							                                                                    Unexercised
					                                                Unexercised		         In-the-Money
					                                                Options/SARs at       Options/SARS at
					                                                7/31/97		             7/31/97(1)
			             Shares Acquired	       Value	        Exercisable/	         Exercisable/
Name			          on Exercise (#)     	Realized($)    Unexercisable(#)	     Unexercisable($)

James Jimirro			       -0-	             -0-             800,000/0	            $73,400/0

</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 4,000 stock 
options per year exercisable at the then market price as 
compensation for their services as a director.  

Compensation Committee Interlocks and Insider Participation

During fiscal 1997, all matters concerning executive officer 
compensation were addressed by the entire Board of Directors as 
the Company did not have a compensation committee.  Jim Jimirro, 
James Fellows, Gary Cowan and Bruce Vann were each directors of 
the Company during fiscal 1997.  




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 50,000 shares of Common 
Stock and stock appreciation rights (SARs) with respect to 50,000 
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 1997 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 1,075,000 or 30% of the Company's 
outstanding shares less 125,000 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 125,000 options to 
be granted and further provides for the granting of 4,000 option 
shares per year to each Non-Employee Director as compensation for 
his services.

A maximum of 125,000 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 24, 1997. 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)		           1,136,000	                   26.9%
James Fellows(2)(4)	               	  35,000	                    (1)
Bruce P. Vann(2)(5)	               	  30,000                    	(1)
All Directors and Officers		 
 as a group 
 (4 persons)(6)		   	              1,237,500	                    29.4%
         
</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 450,000 stock options (See "Stock Option" section) 
as well as 60,000 Warrants purchased in the open market.

(4)	Includes 35,000 shares of Common Stock purchasable under the 
Company's Stock Option Plan.  

(5)	Includes 30,000 shares of Common Stock purchasable under the 
Company's Stock Option Plan.

(6)	Includes 36,500 options granted to officers not listed on 
stock table.



ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


	Bruce P. Vann and the law firms of Kelly Lytton Mintz & 
Vann, of which he is a partner, and Meyer & Vann, of which he was 
a partner for a portion of the year, performed services as 
attorneys for the Company.  For the fiscal year ended July 31, 
1997, Kelly & Lytton and Meyer & Vann earned approximately 
$3,000.  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)

		 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.



	


	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
    





                                 	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 24th day of 
October, 1997.



                                          J2 COMMUNICATIONS

October 24, 1997                          By:/s/ James P. Jimirro
                                                 JAMES P. JIMIRRO
                                                 Chairman of the Board,
                                                 President, and Chief
                                                 Executive Officer (Principal 
	                                                Executive Officer)






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 24th day of 
October, 1997.


Signatures	               Title                         Date

/s/ James P. Jimirro	     Chairman of the Board,        October 24, 1997
JAMES P. JIMIRRO	         President, Chief Executive
	                         Officer (Principal 
	                         Executive Officer)
	                         and Director

/s/ Rudy R. Patino  	     Chief Financial Officer       October 24, 1997
RUDY R. PATINO	           (Principal Financial Officer)

/s/ James Fellows   	     Director                      October 24, 1997
JAMES FELLOWS

/s/ Bruce P. Vann   	     Director                      October 24, 1997
BRUCE P. VANN




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, 1997 AND 1996
TOGETHER WITH AUDITOR'S REPORT







J2 COMMUNICATIONS AND SUBSIDIARIES


INDEX TO FINANCIAL STATEMENTS

JULY 31, 1997




REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS


FINANCIAL STATEMENTS:

  Consolidated Balance Sheets as of
    July 31, 1997 and 1996

  Consolidated Statements of Operations 
    for each of the three years in the period ended July 31, 1997

  Consolidated Statements of Shareholders' Equity 
    for each of the three years in the period ended July 31, 1997

  Consolidated Statements of Cash Flows 
    for each of the three years in the period ended July 31, 1997

  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, 1997 and 1996, and the related consolidated statements of 
operations, shareholders' equity and cash flows for each of the three 
years in the period ended July 31, 1997.  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 audits provide 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, 1997 and 
1996, and the results of their operations and their cash flows 
for each of the three years in the period ended July 31, 1997 in 
conformity with generally accepted accounting principles.


										
									
Arthur Andersen LLP


September 29, 1997
Los Angeles, California






                     J2 COMMUNICATIONS AND SUBSIDIARIES


                        CONSOLIDATED BALANCE SHEETS
                        AS OF JULY 31, 1997 AND 1996



                                  ASSETS

<TABLE>
<S>	                                              <C>	             <C>
	                                                1997   	          1996   
CURRENT ASSETS:
  Cash and cash equivalents	                 $  641,000	      $  120,000
  Short-term investments at, cost 	             861,000	       1,014,000
  Other current assets	                          75,000	          97,000
	                                            ----------	      ----------
          Total current assets	               1,577,000	       1,231,000
		

NONCURRENT ASSETS:
	
  Intangible assets, less accumulated
    amortization of $2,069,000 and
    $1,829,000 in 1997 and 1996, respectively	 3,896,000	      4,136,000
	                                             ----------	     ----------
          Total noncurrent assets	             3,896,000	      4,136,000
	                                             ----------	     ----------

TOTAL ASSETS	                                 $5,473,000	     $5,367,000
	                                             ==========	     ==========


</TABLE>








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





                        J2 COMMUNICATIONS AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS 
                           AS OF JULY 31, 1997 AND 1996



                        LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>									                                   <C>             <C>
	                                             1997     	       1996    
CURRENT LIABILITIES:
  Accounts payable	                      $  130,000	       $  112,000
  Accrued expenses	                         629,000	          681,000
  Accrued royalties	                        499,000	          466,000
  Deferred revenues	                        208,000	          213,000
  Income taxes payable	                      38,000	           38,000
  Common stock payable	                     203,000	          203,000
  Minority interest	                         84,000	            2,000
	                                        ----------	       ----------
          Total current liabilities	      1,791,000	        1,715,000


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
    Preferred stock, no par value:
      Authorized--2,000,000 shares,
      none issued and outstanding	              -    	             -    
    Common stock, no par value:
      Authorized--8,000,000 shares,
      issued and outstanding--
      3,600,000 shares in 1997
      and 1996	                            8,654,000	        8,648,000
    Note receivable on common stock	        (121,000)	        (115,000)
    Deficit	                              (4,851,000)	      (4,881,000)
	                                         ----------	       ----------
          Total shareholders' equity	      3,682,000	        3,652,000
	                                         ----------	       ----------
TOTAL LIABILITIES AND SHAREHOLDERS' 
EQUITY	                                   $5,473,000	       $5,367,000
	                                         ==========	       ==========


</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, 1997
<TABLE>
<S>                                              <C>           <C>          <C>
	                                               1997   	      1996   	     1995   
REVENUES:
  Movies, television and theatrical	       $  970,000	    $  539,000	  $  736,000
  Videocassette sales	                        219,000	       311,000	     336,000
  Royalty income	                              65,000	        45,000	      83,000
  Publishing	                                  56,000   	      8,000    	     -    
  Other	                                       46,000	        61,000	     129,000
	                                          ----------	    ----------	 ----------
          Total revenues	                   1,356,000	       964,000	   1,284,000
		
EXPENSES:
  Costs of movies and television	              53,000	        26,000	      26,000
  Cost of videocassettes sold	                105,000	       141,000	     105,000
  Royalty expense	                             63,000	        37,000 	     62,000	
  Magazine editorial, production and
    distribution	                              41,000	        55,000    	     -    
  Selling, general and administrative	        792,000	       725,000	     818,000
  Amortization of intangible assets	          240,000	       240,000	     240,000
	                                          ----------	    ----------	  ----------
          Total expenses	                   1,294,000	     1,224,000	   1,251,000
	                                          ----------	    ----------	  ----------
          Income (loss) from 
	           consolidated operations	           62,000	      (260,000)	     33,000

OTHER INCOME (EXPENSE):
  Interest and other	                          59,000	        77,000	      49,000
Minority interest in income of
  consolidated subsidiary	                    (82,000)	      (46,000)	    (30,000)
	                                          ----------	    ----------	   ----------
          Income (loss) before provision
            for income taxes	                  39,000	      (229,000)     	 52,000

PROVISION FOR (BENEFIT FROM) INCOME TAXES	      9,000	         7,000	      (14,000)
	                                          ----------	    ----------	    ----------
NET INCOME (LOSS)	                         $   30,000 	   $ (236,000)	   $  66,000
	                                          ==========	    ==========	    ==========
INCOME (LOSS) PER COMMON SHARE	            $     0.01  	  $    (0.07)	   $    0.02
	                                          ==========	    ==========	    ==========
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING	                3,600,000	     3,600,000	    3,597,000
	                                          ==========	    ==========	    ==========
</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, 1997


<TABLE>
<S>                                           <C>          <C>        <C>           <C>            <C>  
		                                                                    Notes
	                                               Common Stock	         Receivable	
	                                        --------------------------	  on Common
	                                            Shares 	     Amount  	   Stock   	      Deficit  	     Total   
BALANCES, July 31, 1994	                   3,602,000	  $8,630,000	   $(105,000)	   $(4,711,000)	  $3,814,000

  Shares issued	                               8,000	       8,000	         -  	         -    	         8,000
  Shares retired	                            (10,000)	         -    	      -  	         -    	            -    
  Accrued interest on note receivable 
    on common stock	                             -    	     5,000	       (5,000)	       -    	            -     
  Net income	                                    -    	        -    	       -  	         66,000	      66,000
	                                          ---------	  ----------	    ---------	     ----------     --------
BALANCES, July 31, 1995	                   3,600,000	   8,643,000	     (110,000)	     (4,645,000)	 3,888,000

  Accrued interest on note receivable 
    on common stock	                             -    	     5,000	       (5,000)	       -    	           -    
  Net loss	                                      -    	        -    	       -  	        (236,000)	   (236,000)
	                                          ---------	  ----------	     ---------	    -----------	    ----------
BALANCES, July 31, 1996	                   3,600,000	   8,648,000	      (115,000)	    (4,881,000)	  3,652,000

  Accrued interest on note receivable 
    on common stock	                             -    	     6,000	         (6,000)	      -    	           -    
  Net income	                                    -    	        -    	        -    	        30,000	      30,000
                                          	---------	  ----------	      ---------	    -----------	   ----------
BALANCES, July 31, 1997	                   3,600,000	  $8,654,000	      $(121,000)	   $(4,851,000)	 $3,682,000
	                                          =========	  ==========	      =========	    ===========	   ==========
</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, 1997
<TABLE>
<S>    							                                    <C>           <C>           <C>

    	                                            1997   	      1996   	      1995   

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)	                       $   30,000	   $ (236,000)	   $   66,000
  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	               82,000	       46,000	         30,000
      Changes in assets and liabilities
        Accounts payable	                      18,000	        3,000	       (103,000)
        Accrued expenses 	                    (52,000)	       8,000	        (33,000)
	       Accrued royalties	                     33,000	      (41,000)	        28,000
        Accrued income taxes 	                    -    	      7,000	        (78,000)
        Deferred revenues	                     (5,000)	       4,000	        (10,000)
        Other	                                 22,000	      (61,000)	         8,000
                                          	----------	   ----------	      ----------
          Net cash provided by (used in)
            operating activities	             368,000	      (30,000)	        148,000
	                                          ----------	   ----------	      ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of short-term investments	      (1,053,000)	   (1,349,000)	     (1,492,000)
  Sale of short-term investments	           1,206,000	     1,289,000	       1,368,000
Distribution to minority shareholders	            -    	     (91,000)	           -     
	                                          ----------	    ----------	      ----------
          Net cash provided by (used in) 
	           investing activities	             153,000	      (151,000)	       (124,000)
	                                          ----------	    ----------	        ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on notes payable	                      -    	         -    	        (42,000)
  Proceeds from exercise of stock options	        -    	         -    	          8,000
	                                          ----------	    ----------	        ----------
          Net cash used in financing
            activities	                           -    	         -    	         (34,000)
	                                          ----------	    ----------	        ----------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS	                               521,000	      (181,000)	          (10,000)
	
CASH AND CASH EQUIVALENTS,
  beginning of year	                          120,000	       301,000	           311,000
	                                          ----------	    ----------	        ----------
CASH AND CASH EQUIVALENTS,
  end of year	                             $  641,000	    $  120,000	         $  301,000
	                                          ==========	    ==========	         ==========
</TABLE>


<TABLE>
<S>                                             <C>             <C>              <C>	
SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION--
    Cash paid during the year for
      income taxes	                        $    9,000	     $    2,000	         $    9,000
	                                          ==========	     ==========	         ==========

</TABLE>




















		

















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











                           J2 COMMUNICATIONS AND SUBSIDIARIES


                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                     JULY 31, 1997



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.  
Despite the existence of a working capital deficit of $206,000 as 
of July 31, 1997, management of the Company believes that its 
cash and short-term investments at July 31, 1997, and projected 
cash flows in fiscal 1998 will be adequate to pay its liabilities 
as they become due.

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 are 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 $5,583,000 in licensing revenues 
(including revenues received in connection with an agreement for 
the licensing of the name for three feature films - see Note 5) 
since the acquisition of the "National Lampoon" name in fiscal 
1991.  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 assets will result 
in the recovery of the carrying amount of such assets.

Per Share Information

Primary earnings per share are computed by dividing net earnings 
by the weighted average common shares outstanding and common 
share equivalents during the period.  Common stock equivalents 
include, if dilutive, the number of shares issuable on exercise 
of the outstanding options less the number of shares that could 
have been purchased with the proceeds from the exercise of the 
options based on the average price of common stock during the 
year.  The assumed exercise of all options and warrants during 
the years ended July 31, 1997, 1996 and 1995 was not dilutive 
and, therefore, was not included in the computation of weighted 
average shares outstanding.

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 the current year 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 principles 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

The Company has adopted the requirements of SFAS No. 121, 
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of," issued in October 1995 and the 
pro-forma disclosure requirements of SFAS No. 123, "Accounting 
for Stock-Based Compensation," issued in October 1995.  The 
effect of the new financial accounting pronouncements was not 
material to the Company's consolidated financial statements.

In March 1997, the Financial Accounting Standard Board 
("FASB")issued SFAS No. 128, "Earnings per Share" and SFAS No. 
129, "Disclosure of Information about Capital Structure" which 
are effective for financial statements for periods ending after 
December 15, 1997.  

In June, 1997 the 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 ending after December 31, 1998.

Management does not believe adoption of SFAS No. 128, SFAS No. 
129 and SFAS No. 130 will have a material effect on the Company's 
consolidated financial statements.

Reclassifications

Certain items in the 1996 and 1995 financial statements have been 
reclassified to conform with the 1997 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>
                                            1997  	    1996   

U.S. Government obligations, cost		      $861,000	   $1,014,000
Gross unrealized holding gains		           26,000	       15,000
							                                  --------	    ---------
U.S. Government obligations, fair value	 $887,000	   $1,029,000
							                                  ========	    =========
</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>
                                                  1997  	    1996  
		
	Deferred videocassette revenues	              $126,000	   $131,000
	Unearned subscription revenues 	                82,000	     82,000
		                                             --------	   --------
		                                             $208,000	   $213,000
		                                             ========	   ========
</TABLE>
4.	Accrued Expenses

Accrued expenses consist of the following:
<TABLE>
                 <S>                               <C>	        <C>
                                                  1997  	     1996  
		
	Reserve for contingent payment on 
	  sale of stock	                              $158,000	   $158,000
	Deferred salary	                               189,000	    199,000
	Legal expenses	                                100,000	    121,000
	Stock appreciation rights	                      37,000	        -    
	Other 	                                        145,000	    203,000
		                                             --------	   --------
		                                             $629,000	   $681,000
		                                             ========	   ========
</TABLE>


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.  Pursuant to the contract terms, Showtime 
has paid the producer fees due for five movies as of July 31, 
1997.  The producer fees due for the sixth and seventh movies of 
$300,000 will be paid in the fiscal year ended July 31, 1998.  
The Company is currently seeking to replace the Showtime license 
agreement.  In the event that the Company is unable to replace 
the Showtime agreement with a comparable arrangement, movies, 
television, and theatrical revenues could be adversely impacted. 

Revenue recognized under this agreement totaled $300,000, 
$150,000, and $150,000 for the years ended July 31, 1997, 1996, 
and 1995, respectively.

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, each at a budget not greater 
than $10 million, within four and one-half years of execution of 
the agreement.  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 $118,000, $166,000 and 
$430,000 for the years ended July 31, 1997, 1996 and 1995, 
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 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.  The Company 
has recorded a liability, included in accrued expenses, at 
July 31, 1997 and 1996, 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 $287,000, $117,000, and 
$78,000 for each of the three years in the period ended July 31, 
1997.  Of this revenue the minority interest's share totaled 
$82,000, $46,000 and $30,000, respectively.

Leases

The Company is obligated under an operating lease expiring on 
September 30, 2001, 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 2003 for equipment located at its office facility.

The Company is also obligated under an operating lease expiring 
in November 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
      1998             $ 82,000          $20,000     $102,000  
      1999               86,000            8,000       94,000
      2000               89,000            2,000       91,000
      2001               15,000            2,000       17,000
      2002                -                2,000        2,000
                       --------          -------     --------
Total                  $272,000          $34,000     $306,000
                       ========          =======     ========
</TABLE>
Rent expense totaled $79,000 for the year ended July 31, 1997, 
and $79,000 and $86,000, net of sublease income of $5,000 and 
$30,000 for the years ended July 31, 1996 and 1995, 
respectively.

Equipment lease expense totaled $8,000, $18,000 and $31,000 for 
the years ended July 31, 1997, 1996 and 1995, 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 
$19,000, $11,000, and $15,000 for the years ended July 31, 1997, 
1996, and 1995, 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.  Royalties payable under these agreements 
totaled $45,000, $26,000 and $47,000 for the years ended July 31, 
1997, 1996, and 1995, respectively.

GPEC Agreement

In 1987, NLI sold the exclusive rights to produce television 
programming utilizing the name "National Lampoon" to Gurber-
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 for 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 1997 or 1996.  Deferred bonuses for the 
President, included in accrued expenses, totaled $100,000 and 
$100,000 as of July 31, 1997 and 1996.  In addition, certain 
officers have deferred salary of $89,000 and $99,000 as of 
July 31, 1997 and 1996, respectively, also included in accrued 
expenses.

The Company has also granted the President options to purchase 
50,000 shares of its common stock and 50,000 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.

Management Contract of Magazine

In August 1993, the Company entered into an agreement for a 
magazine publisher to print and distribute the National Lampoon 
magazine.  In accordance with the terms of this agreement, the 
Company retained editorial control of the magazine's content and 
received a fee equal to 5 percent of all revenues generated by 
the magazine in its first year of publication, 6 percent in the 
second year and 7 percent for each year thereafter.  In February 
1996, the agreement was terminated by the Company because 
certain minimum performance targets had not been met by the 
publisher.  The Company resumed publishing the magazine in May 
1996.  The Company earned revenues of $8,000 under this 
agreement during the year ended July 31, 1995.  No revenues were 
earned related to this agreement in fiscal 1996 prior to 
termination of the agreement.

As part of this agreement, the publisher had agreed to assume 
the Company's liabilities relating to the magazine, including 
unearned subscription revenues and accrued retail display 
allowances of $79,000, included in accrued expenses as of July 
31, 1997 and 1996, owed to various vendors for magazine shelf 
space.  Because the Company holds title to the "National 
Lampoon" name, the Company continued to record liabilities for 
these amounts after termination of the agreement.

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 125,000 shares of its common stock to the Plaintiffs 
and for the payment of attorneys' fees.  The value of the shares 
to be paid is presented as a liability of $203,000 as of 
July 31, 1997, and 1996, as the shares have not yet been issued 
and the settlement has not been approved.


NLI had a motion picture development and consulting agreement 
with Matty Simmons, a former officer of NLI.  In November 1992, 
Matty Simmons Productions, Inc. and Matty Simmons (collectively 
"Simmons") filed a complaint against the Company alleging breach 
of contract.  In December 1993, this litigation was settled.  
The terms of the settlement agreement provide for the Company to 
pay Simmons a percentage (not to exceed $240,000 in total) of 
any amounts earned by the Company from certain previously 
released National Lampoon films.  A total of $42,000, $66,000 
and $62,000 was paid to Simmons during the years ended July 31, 
1997, 1996 and 1995, respectively.

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 from 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 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, 1994	           559,000	     $0.56 - $2.63	      $1.43
	  Granted	                       174,000	     $1.06 - $1.37	      $1.18
	  Exercised	                      (8,000)	    $0.72 - $1.10	      $0.91
	  Canceled	                     (193,000)	    $0.69 - $2.63      	$2.30
		                              ---------      -------------      ------		
Balance, July 31, 1995	           532,000	     $0.56 - $1.48	      $1.09
	  Granted	                        62,000	     $1.08 - $1.19	      $1.10
		                              ---------      -------------	     ------
Balance, July 31, 1996	           594,000	     $0.56 - $1.48	      $1.10
	  Granted	                       115,000	     $0.88 - $1.13	      $1.00
	  Canceled	                      (70,000)	    $1.06 - $1.19	      $1.13
		                              ---------      -------------	      -----     
Balance, July 31, 1997	           639,000	     $0.56 - $1.19	      $1.08
		                              =========	     =============	      =====    
    
</TABLE>
Of the options outstanding as of July 31, 1997, 1996, and 1995, 
577,000, 564,000, and 481,000, respectively, were exercisable 
with a weighted average exercise price of $1.09, $1.1, and $1.1, 
respectively.  The weighted average remaining contractual life of 
the options outstanding as of July 31, 1997 was 3.4 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:
                                                      
                                   							  Years ended July 31, 
		                                          --------------------
<TABLE>
<S>                                           <C>           <C>
		                                           1997	         1996
Net income (loss)-as reported	             $30,000	    $(236,000) 
Net loss-pro-forma		                      $(11,000)	   $(243,000)
Earnings (loss) per share-as reported	        $.01	        $(.07)
Loss per share-pro-forma		                    $.00		       $(.07)
</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	                     52.9%
	Risk free interest rate		                            5.68%
	Expected life of options		                         2 years
</TABLE>

The weighted average fair value of options granted during fiscal 
1997 and 1996 is $.36 and $.1, respectively.

Warrants

In connection with its acquisition of NLI in 1990, the Company 
issued 1,753,000 Series A warrants (including 148,000 warrants 
issued to certain creditors).  The warrants expire on December 
31, 1997, and entitle each holder to exchange one warrant for a 
share of the Company's common stock at a price of $2.00 per 
share.  The Series A warrants are callable at a price of $2.00 
per warrant on or after October 15, 1992, at the option of the 
Company if the closing price per share of common stock equals or 
exceeds 175% for a period of 20 trading days.  There were 
1,737,000 Series A warrants outstanding at July 31, 1997.

Stock Appreciation Rights

As of July 31, 1997, the President and Chief Executive Officer of 
the Company had 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, 1997, appreciation in these rights 
amounted to approximately $37,000.  This amount has been included 
as an accrued liability on the accompanying consolidated balance 
sheet.

As of July 31, 1997, a total of 350,000 rights were outstanding 
with appreciation basis of between $0.56 and $1.48 per share.


8.	Related Party Transactions

Legal fees of $3,000, $12,000 and $16,000, included in selling, 
general and administrative expenses, were incurred during fiscal 
1997, 1996 and 1995, respectively, for services from legal firms, 
one of whose partners is a director of the Company.

See Note 6 for discussion of notes 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>
	                                         1997 	     1996 	     1995 	

	Current:
	  State	                                $9,000	    $7,000	   $ 11,000
	  Federal	                                 -   	      -   	     1,000
	Adjustment to valuation
	  allowance:
	  State	                                   -   	       -   	  (26,000)
		                                       ------	    ------	   --------
		                                       $9,000	    $7,000	   $(14,000)
		                                       ======	    ======	   ========
</TABLE>
A reconciliation between the statutory federal rate and the 
Company's effective rate follows:
<TABLE>
           <S>                              <C>         <C>        <C>
	                                          1997	        1996	     1995

	Statutory federal
	  income tax rate (benefit)	               34%	        (34%)	      34%
	State income taxes	                        19	           3	        19
	Amortization of intangible 
	  assets	                                 173	          36	       158
	Recognition of previously 
	  unrecognized deferred tax asset,			
	  including net operating losses, 
	  net	                                   (213)          (4)       (244)
	Other	                                      6	           2	          6
		                                       -----	       -----	      -----
	Effective rate (benefit)	                 19%	          3%	       (27%)
		                                       =====	       =====	      =====
</TABLE>
As of July 31, 1997, the tax effect of deductible timing 
differences and carryforwards is comprised of the following:
<TABLE>
            <S>                                    <C>          <C>
		                                                1997	        1996

	Net operating loss carryforwards              $ 987,000  $1,283,000	
	Accrued liabilities and contingencies           146,000     171,000
	Royalty reserves                                199,000     186,000
	Deferred income                                  83,000      85,000
	                                             ----------  ----------
	                                              1,415,000   1,725,000
	Valuation allowance                          (1,415,000) (1,725,000)
	                                             ----------   ---------
	Net deferred tax asset                         $   -      $   -
	                                             ==========   =========
</TABLE>
As of July 31, 1997, the Company had available for federal and 
state income tax purposes net operating loss carryforwards of 
approximately $1,721,000 and $747,000, respectively, expiring at 
various dates through 2011.  Certain of the state net operating 
losses may be limited through statutory provisions.



10.	Major Customers

During the year ended July 31, 1997, the Company received 
$300,000 in revenues from a motion picture licensee representing 
24 percent of total revenues.  During the year ended July 31, 
1996, the Company received $166,000 and $150,000 in revenues from 
two motion picture licensees representing 17 percent and 15 
percent of total revenues, respectively.  During the year ended 
July 31, 1995, the Company received $430,000 and $188,000 from 
two motion picture licensees representing 34 percent and 15 
percent of total revenues.