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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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| OMB APPROVALOMB Number: 3235-0070 Expires: March 31, 2006Estimated average burden    hours per response: 192.00**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**
 
**AMENDED FORM 10-QSB**
 

(Mark One) 
[X ] QUARTERLY    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ___March 31, 2004______________________________ [ ] TRANSITION    REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 
For the transition period from _________________ to    _________________ Commission    file number ___0-30118____________________________________
EMPYREAN COMMUNICATIONS INC.

(exact name of small business issuer as specified in its charter)

___NEVADA_____________________________________    (State or other jurisdiction of incorporation or organization)
_________88-0413417________________________    (IRS Employer Identification No.)
2537 South Gessner, Suite 114,

Houston, TX 77063

(address of principal executive offices)

Issuers telephone number: (713) 260 7236

(Registrant's telephone number, including area code)

_________________________________________________________________________________(Former name, former address and former fiscal year, if changed since lastreport)

 

Check whether the issuer

filed all documents and reports required to be filed by Section 13 or    15(d) of the Exchange Act during the last 12months(or for such shorter    period that the registrant was required to file such reports)and

has been subject to such filing requirements for the past 90 days (X) Yes    ( ) No 
** **
_As of March 31, 2004 there were 21,765,951* shares of common stock issuedand outstanding

Note: * Does not include 1,150,000 shares "on hold" and awaiting return fromthird party

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X  ]

 
**PART I ' FINANCIAL INFORMATION

Item 1. Financial Statements.

Following are the un-audited financial statements for the period ended March31, 2004:

 

 

  EMPYREAN  COMMUNICATIONS, INC.

  (A Development Stage  Company)

  CONSOLIDATED BALANCE  SHEET

  March 31, 2004

                           

                                       

   

  ASSETS

        

  Current Assets

    Cash                                                                     $     2,121

                                                                             ===========           

   

   

   

  LIABILITIES AND  STOCKHOLDERS' DEFICIT

   

  LIABILITIES

   

  Current Liabilities

   

    Accounts Payable                                                         $    15,596        

    Notes payable to  shareholders                                                55,453

                                                                             ----------- 

    Total Current  Liabilities                                                    71,049  

                                                                             -----------

  Commitments and  Contingencies

   

  STOCKHOLDERS'  DEFICIT

   

    Preferred stock,  $.001 par, 10,000,000 shares

      authorized,  10,000,000 shares issued and outstanding                      10,000

    Common stock,  $.001 par, 50,000,000 shares

       authorized,  21,765,951 shares issued and outstanding                     21,766

    Paid in  capital                                                          5,343,789

    Deficit accumulated during the  development stage                        (5,444,483 )

                                                                      -----------

       Total  Stockholders' Deficit                                         (   68,928  )

                                                                            -----------           

         Total  Liabilities & Stockholders' Deficit                        $     2,121

                                                                            ===========

   

   

   

   

   

   

   

   

   

   

   

   

   

   
 

     EMPYREAN  COMMUNICATIONS, INC.

           (A  Development Stage Company)

  CONSOLIDATED  STATEMENTS OF EXPENSES

  Three Months Ended  March 31, 2004 and 2003 and the Period from 

  October 30, 2000  (Inception) Through March 31, 2004

   

   

 

                                                                        

                                                                            Inception

                                                                              Through

                                                                             March 31,

                                           2004                 2003            2004

                                         --------            -------         -----------

  General and  administrative            $  114,998            $ 5,890       $ 2,941,339

  Impairment of  investment                  -                   -             2,600,000

  Gain on forgiveness  of debt             (28,629)              -            (   96,856 )

                                         --------            -------         -----------

  Net loss                               $(86,369 )          $(5,890 )     $(5,444,483 )

                                         ========            =======        =========== 

   

  Basic and diluted  loss per

        common share                    $   (0.00 )          $ (0.00 )            

  Weighted average  common

        shares  outstanding            18,524,193           3,737,489                     

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

 

  EMPYREAN  COMMUNICATIONS, INC.

  (A Development Stage  Company)

  CONSOLIDATED  STATEMENTS OF CASH FLOWS

  Three Months Ended  March 31, 2004 and 2003 and the Period from 

  October 30, 2000  (Inception) Through March 31, 2004

       

                                 

                                           Inception

                                                                                Through

                                                                                March 31,

                                                 2004           2003               2004

                                              ---------     -----------       -----------

  CASH FLOWS FROM  OPERATING ACTIVITIES

    Net loss                                 $ (86,369)      $(5,890  )       $(5,444,483 )

    Adjustments to reconcile net loss

       to cash used in operating  activities:

    Stock issued for  services                  112,500             -           1,798,425
  Stock issued for settlement                  -		-  	       38,000
    Fair value of  stock issued in excess

      of debt                                     -                -                  500

    Imputed interest                            1,194             -                5,335

    Impairment of  investment                     -                -            2,600,000

    Gain on forgiveness of debt                (28,629)            -           (   96,856 )

    Changes in:

      Accounts  payable                        (  4,124)        5,458            1,027,447

                                              ---------     -----------       -----------

  NET CASH USED IN OPERATING ACTIVITIES      (  5,428 )      (   432 )        (   71,632  )

                                              ---------     -----------       -----------

  CASH FLOWS FROM  FINANCING ACTIVITIES

    Proceeds from  notes payable to 

      shareholders                              7,270        ( 2,439 )             78,122

    Payments on notes  payable to

      Shareholders                           (    404 )          -             (   15,169 )

    Stock issued for  cash                          -          4,000                10,800

                                              ---------     -----------       -----------

  NET CASH PROVIDED BY  FINANCING ACTIVITIES    6,866         1,561                73,753

                                              ---------     -----------       -----------

   

  NET CHANGE  (INCREASE/DECREASE) IN CASH       1,438          1,129                1,438

    Cash balance,  beginning                       683           -                     -

                                              ---------     -----------       -----------

    Cash balance,  ending                    $   2,121   $     1,129          $      2,121

                                              =========     ===========       ===========

   

  NON-CASH  DISCLOSURES:  

    Forgiveness of  debt by a related party $     -     $       -            $    29,578

    Stock issued for  accounts payable            -              -                965,599

    Stock issued for  notes payable               -              -                  7,500

        

   

   

   

   

   

   

   

   

   
 

   EMPYREANCOMMUNICATIONS, INC.

(A Development StageCompany)

   NOTES TOCONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 1 - BASIS OFPRESENTATION

 

The accompanyingunaudited interim financial statements of Empyrean Communications, Inc.("Empyrean") have been prepared in accordance with accounting principlesgenerally accepted in the United States of America and the rules of theSecurities and Exchange Commission ("SEC"), and should be read in conjunctionwith the audited financial statements and notes thereto contained in Empyrean'slatest annual report filed with the SEC on Form 10KSB.  In the opinion ofmanagement, all adjustments, consisting of normal recurring adjustments,necessary for a fair presentation of financial position and the results ofoperations for the interim periods presented have been reflected herein.  Theresults of operations for interim periods are not necessarily indicative of theresults to be expected for the full year.  Notes to the financial statementswhich would substantially duplicate the disclosure contained in the auditedfinancial statements for fiscal year 2003, as reported in the 10KSB, have beenomitted.

 

 

NOTE 2 - Equity

 

In Ferbuary , 2004,Empyrean issued 5,500,000 shares of common stock for services valued at$112,500. 5,000,000 of the shares with value of $100,000 were issued to twoEmpyrean officers.

 

NOTE 3 - GAIN ON FORGIVENESS OF DEBT

 

In first quarter of 2004, Empyrean recorded a gain of $28,629 for forgiveness ofdebt.

 

 

 

 
**Item 2. Management's Plan of Operation.**
The company is in its initial stages of development with no revenues orincome and is subject to all the risks inherent in the creation of a newbusiness. Since the company's principal activities to date have been limited toorganizational activities, prospect development, and acquisition of interest, ithas no record of revenue-producing operations. Consequently, there is nooperating history upon which to base an assumption that the company will be ableto achieve it's business plans

The company's main business focus is to pursue all available avenues in orderto obtain the funding required for its wholly owned subsidiary, Basalt FiberCompany, to commence the manufacture and sales of continuous basalt fiber andrelated products.

In brief, Basalt fiber is the newest fiber application technology availableto the Western Hemisphere. Basalt Fiber can effectively replace fiberglass inall its applications. It is also stronger, ecologically safer and more costeffective than fiberglass. As the properties of Basalt Fiber are far superiorthan fiber glass, it will command premium prices for all its products. The manyexciting uses of basalt fiber include its application in industry, the military,local law enforcement and fire safety. Furthermore, Basalt Fiber's superiorstrength and advanced thermal properties will aid in the construction of muchstronger and more fire resistant structures. It can also be used to enhance fireresistant apparel for firefighters and stronger bulletproof vests for lawenforcement personnel.
**Principal Product

Liquidity**
During the next 12 months, the company will need significant working capitalto fund its business development efforts and to complete the acquisition ofBasalt Specialty Products, Inc.. The Company continues to actively pursuefinancing from all available sources both in the US and overseas. 
**Item 3. Controls and Procedures**
As of March 31, 2004, the Company carried out an evaluation of theeffectiveness of the Company's disclosure controls and procedures (as defined byRule 13a-14(c) under the Securities Exchange Act of 1934) under the supervisionand with the participation of the Company's chief executive officer and chieffinancial officer. Based on and as of the date of such evaluation, theaforementioned officers have concluded that the Company's disclosure controlsand procedures were effective. 

The Company also maintains a system of internal accounting controls that isdesigned to provide assurance that assets are safeguarded and that transactionsare executed in accordance with management's authorization and properlyrecorded. This system is continually reviewed and is augmented by writtenpolicies and procedures, the careful selection and training of qualifiedpersonnel and an internal audit program to monitor its effectiveness. During thenine-month period ended March 31, 2003, there were no significant changes tothis system of internal controls or in other factors that could significantlyaffect those controls. 
** 

PART II - OTHER INFORMATION

Item 5. Other Information**
Board Meetings:

The Board of Directors, at a Special meeting held in Houston, Texas onFebruary 12, 2004, approved the filing of a form S-8 registration statement forcommon shares to be issued to pay for professional fees and as compensation forconsultants serving the Company.

The following shares were issue:

Mr. James B. Parsons 500,000 shares for legal fees of $10,000

Mr. Robert L. Lee 2,500,000 shares for consulting fees of $50,000

Mr. Anthony Fanale 2,500,000 share for consulting fees of $50,000
**Item 6. Exhibits and Reports on Form 8-K.

Exhibit No.     Document                            Location

3(i)                    Articles of Incorporation     Previously Filed

3(ii)                    Bylaws                                   Previously filed 

________________________________________________________________________
**Reports on Form 8-K**
On March 3, 2004, the Company filed a report on Form 8-K, reporting a changein accountants under Item 4. The Company amended such filing on March 19, 2004.
**SIGNATURES**
In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized. 
**EMPYREAN COMMUNICATIONS, INC.**
 

 

***/s/ Robert L. Lee                           ** ***Date:  May 25, 2004

Robert L. Lee, President and Director

 

 

***/s/ Anthony Fanale                       ***Date:  May 25, 2004

Anthony Fanale, Director

 

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Robert L. Lee, certify that:

 

            1. I havereviewed this quarterly report on Form 10-QSB of Empyrean Communications, Inc.for the period ended March 31, 2003; 

            2. Based on my knowledge, this quarterly report does not containany untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered bythis quarterly report; 

               3. Based on my knowledge, the financial statements, and otherfinancial information included in this quarterly report, fairly present in allmaterial respects the financial condition, results of operations and cash flowsof the registrant as of, and for, the periods presented in this quarterlyreport. 

               4. The registrant's other certifying offering officers and Iare responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) andinternal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have: a) designed suchdisclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to us by others within those entities, particularly during theperiod in which this quarterly report is being prepared; b) designed suchinternal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonableassurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generallyaccepted accounting principles; c) evaluated the effectiveness of theregistrant's disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this quarterly report based on suchevaluation; and d) disclosed in this quarterly report any change in theregistrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter that has materially affected, or isreasonably likely to materially affect, the registrant's internal control overfinancial reporting; and 

               5. The registrant's other certifying officer(s) and I havedisclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant's auditors and the audit committee ofregistrant's board of directors (or persons performing the equivalent function):a) all significant deficiencies and material weaknesses in the design oroperation of internal control over financial reporting which are reasonablylikely to adversely effect the registrant's ability to record, process,summarize and report financial information; and b) any fraud, whether or notmaterial, that involves management or other employees who have a significantrole in the registrant's internal controls over financial reporting. 

Dated: May 25, 2004

***/s/ Robert L. Lee           ***

By: Robert L. Lee

President (or equivalent)

 
**CERTIFICATION PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

(18 U.S.C. SECTION 1350)**
 

In connection with the Annual Report of Empyrean Communications, Inc.., aNevada corporation (the "Company"), on Form 10-QSB for the quarter ending March31, 2004 as filed with the Securities and Exchange Commission (the "Report"), I,Robert L. Lee,  President of the Company, certify, pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge: 

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d)of the Securities Exchange Act of 1934; and 

 

(2) The information contained in the Report fairly presents, in all materialrespects, the financial condition and result of operations of the Company. 

 

 

***/s/ Robert L. Lee                           ***

Robert L. Lee, President

Dated: May 25, 2004**** |