UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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 June 30, 2002                         
|                                                                           
|[ ]                                                                         | 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)



2537 South Gessner,
Suite 114,

Houston, TX 77063

(address of principal
executive offices)



Issuers telephone
number: (713) 260 7236

|NEVADA
      (State or other
      jurisdiction of incorporation or organization)                                                                                                | 88-0413417
      (IRS Employer
      Identification No.)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------
|                                                                                                                                                                                
|_________________________________________________________________________________
      (Former name, former address and former fiscal year, if changed since last
      report)



Check whether the issuer

1. 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
2. has been subject to such filing
    requirements for the past 90 days (X) Yes ( ) No



As of June 30, 2002
there were 3,700,951 shares of common stock issued and outstanding

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 June, 30, 2002.

EMPYREAN
COMMUNICATIONS INC.

(A Development Stage
Company)

STATEMENT OF CASH
FLOWS

For the three month
periods ended June 30, 2002 and 2001and the six month period ended June 30, 2002
and 2001

and for the period
October 30,2000 (Date of Incorporation) to June 30, 2002

(Unaudited)



|                                              |                                                                              | For the Three
      Months Ended June 30,2002 |  | For the Three
      Months Ended June 30,2001 |  | For the Six Months
      Ended June 30,2002 |  | For the Six Months
      Ended June 30,2001 |  | October 30,2000
      (Date of Incorporation) to June 30,2002
|--------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------- |  | --------------------------------------------- |  | ------------------------------------------- |  | ------------------------------------------- |  | -------------------------------------------------------------
|Cash Flows used in
      Operating Activities |                                                                              |                                               |  |                                               |  |                                             |  |                                             | 
|                                              | Net loss for the
      period                                                | (444,772)                                     |  | (89,401)                                      |  | (548,795)                                   |  | (543,633)                                   |  | (7,367,473)                                                  
|                                              | Loss on write-off
      of foreign bank accounts                             | 65                                            |  |                                               |  |                                             |  |                                             |  | 65                                                           
|                                              | Items not
      affecting cash:                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Loss on write-off
      of technology                                        | 0                                             |  | 0                                             |  | 0                                           |  |                                             |  | 5,843,140                                                    
|                                              | Gain on
      forgiveness of debt                                            | 0                                             |  | (29,577)                                      |  | 0                                           |  | (29,577)                                    |  | (29,577)                                                     
|                                              |                                                                              | (444,707)                                     |  | (118,978)                                     |  | (548,795)                                   |  | (573,210)                                   |  | (1,553,845)                                                  
|                                              | Changes in
      non-cash working capital balances                           |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | balances related
      to operations:                                        |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Prepaid expenses                                                             | (18,000)                                      |  | 0                                             |  | -451,500                                    |  | 16,000                                      |  | -433,500                                                     
|                                              | Accounts Payable                                                             | (275,649)                                     |  | 113,855                                       |  | -765,825                                    |  | 515,074                                     |  | 176,856                                                      
|                                              | Net Cash (used by)
      from operating activities                           | (293,649)                                     |  | 113,855                                       |  | (1,217,325)                                 |  | 531,074                                     |  | (256,644)                                                    
|Investing
      Activities                    |                                                                              |                                               |  |                                               |  |                                             |  |                                             | 
|                                              | Cash acquired on
      business acquisition                                  | 0                                             |  | 0                                             |  | 0                                           |  | 19,888                                      |  | 316                                                          
|                                              | Investment in
      Basalt Fiber Company                                     | (900,000)                                     |  | 0                                             |  | (900,000)                                   |  | 0                                           |  | (900,000)                                                    
|                                              | Increase in
      shareholder loans                                          | 9,291                                         |  |                                               |  | 12,388                                      |  | 0                                           |  | 33,232                                                       
|                                              | Net Cash (used by)
      from Investing Activities                           | (890,709)                                     |  | 0                                             |  | -887,612                                    |  | 19,888                                      |  | (866,452)                                                    
|Financing
      Activities                    |                                                                              |                                               |  |                                               |  |                                             |  |                                             | 
|                                              | Exchange of debt
      for common shares                                     | 270,000                                       |  | 0                                             |  | 1,294,476                                   |  | 0                                           |  | 1,294,476                                                    
|                                              | Exchange of common
      shares for future services                          | 459,000                                       |  | 0                                             |  | 459,000                                     |  | 0                                           |  | 459,000                                                      
|                                              | Proceeds from
      issuance of common shares                                | 0                                             |  | 0                                             |  | 0                                           |  | 22,400                                      |  | 23,400                                                       
|                                              | Exchange of common
      shares for Investment in Basalt Fiber Company       | 900,000                                       |  | 0                                             |  | 900,000                                     |  | 0                                           |  | 900,000                                                      
|                                              | Net Cash (used by)
      from Financing Activities                           | 1,629,000                                     |  | 0                                             |  | 2,653,476                                   |  | 22,400                                      |  | 2,676,876                                                    
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Net increase
      (decrease) in cash during the period                      | -65                                           |  | -5,123                                        |  | -256                                        |  | 152                                         |  | -65                                                          
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Cash, beginning of
      the period                                          | 65                                            |  | 5,396                                         |  | 256                                         |  | 121                                         |  | 65                                                           
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Cash, end of the
      period                                                | (0.00)                                        |  | 273                                           |  | 0                                           |  | 273                                         |  | (0.00)                                                       
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Supplemental
      disclosure of cash flow information                       |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Cash Paid for:                                                               |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Interest                                                                     | 0.00                                          |  | 0.00                                          |  | 0.00                                        |  | 0.00                                        |  | 0.00                                                         
|                                              | Income taxes                                                                 | 0.00                                          |  | 0.00                                          |  | 0.00                                        |  | 0.00                                        |  | 0.00                                                         
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              |                                                                              |                                               |  |                                               |  |                                             |  |                                             |  |                                                              
|                                              | Non-cash
      transactions - see notes to accompanying financial statements |                                               |  |                                               |  |                                             |  |                                             | 





EMPYREAN
COMMUNICATIONS INC.

(A Development Stage
Company)

BALANCE SHEETS

for the periods ended
June 30, 2002 and December 31, 2001



|                                          |                                                           |                               | June 30, 2002 |             | December 31,
      2001
|----------------------------------------- | --------------------------------------------------------- | ----------------------------- | ------------- | ----------- | -----------------------
|                                          |                                                           |                               | Unaudited     |             |                        
|Assets                                    |                                                           |                               |               |             |                        
|                                          | Cash                                                      |                               | -             |             | 191                    
|                                          | Prepaid expenses -
      see accompanying notes           | 451,500                       |               | -          
|                                          |                                                           | to financial
      statements |               |             |                        
|                                          | Investment In
      Basalt Fiber - see accompanying notes |                               |               |            
|                                          |                                                           | to financial
      statements | 900,000       |             |                        
|                                          |                                                           |                               |               |             |                        
|Total Assets                              |                                                           | 1,351,500                     |               | 191        
|                                          |                                                           |                               |               |             |                        
|                                          |                                                           |                               |               |             |                        
|Liabilities                               |                                                           |                               |               |             |                        
|                                          | Accounts Payable -
      see accompanying notes           |                               |               |            
|                                          |                                                           | to financial
      statements | 203,457       |             | 969,217                
|                                          | Due to
      shareholders - see accompanying notes        |                               |               |            
|                                          |                                                           | to financial
      statements | 33,232        |             | 20,844                 
|                                          |                                                           |                               |               |             |                        
|Total Liabilities                         |                                                           | 236,689                       |               | 990,061    
|                                          |                                                           |                               |               |             |                        
|Stockholders
      Equity                 |                                                           |                               |               |            
|                                          | Capital Stock                                             |                               |               |            
|                                          | Authorized:                                               |                               |               |            
|                                          | 50,000,000 common
      shares, $0.001 par value          |                               |               |            
|                                          | 10,000,000
      preferred shares, $0.001 par value       |                               |               |            
|                                          | Issued:                                                   |                               |               |             |                        
|                                          | 19,502,240 common
      shares - see accompanying notes   |                               |               |            
|                                          |                                                           | to financial
      statements | 35,395        |             | 16,045                 
|                                          | Additional paid in
      capital                          | 8,446,889                     |               | 5,812,763  
|                                          | Deficit
      accumulated during the development stage    | (7,367,473)                   |               | (6,818,678)
|                                          |                                                           |                               |               |             |                        
|Total Stockholders
      Equity/(Deficit) | 1,114,811                                                 |                               | (989,870)    
|                                          |                                                           |                               |               |             |                        
|                                          | Liabilities and
      Shareholders Equity/(Deficit)       | 1,351,500                     |               | 191        





EMPYREAN
COMMUNICATIONS INC.

(A Development Stage
Company)

Income Statement

for the Three Months
and Six Months Periods Ended June 30, 2002 and 2001

with cumulative since
inception





(UNAUDITED)



|                                          |                                                                              |           | For the Three
      Months Ended June 30,2002 |           | For the Three
      Months Ended June 30,2001 |           | For the Six
      Months Ended June 30,2002 |           | For the Six
      Months Ended June 30,2001 |             | October 30,2000
      (Date of Incorporation) to June 30,2002
|----------------------------------------- | ---------------------------------------------------------------------------- | --------- | --------------------------------------------- | --------- | --------------------------------------------- | --------- | ------------------------------------------- | --------- | ------------------------------------------- | ----------- | -------------------------------------------------------------
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|Operating Expenses                        |                                                                              | 444,772   |                                               | 118,978   |                                               | 548,795   |                                             | 573,210   |                                             | 1,563,904  
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|Operating Loss                            |                                                                              | (444,772) |                                               | (118,978) |                                               | (548,795) |                                             | (573,210) |                                             | (1,563,904)
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|Other
      Income/(Expenses)             |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |            
|                                          | Loss on write-off
      of technology                                        |           |                                               |           |                                               |           |                                             |           |                                             |             | (5,843,140)                                                  
|                                          | Miscellaneous
      Income                                                   |           |                                               |           |                                               |           |                                             |           |                                             |             | 9,993                                                        
|                                          | Gain on
      forgiveness of debt                                            |           |                                               |           | 29,577                                        |           |                                             |           | 29,577                                      |             | 29,578                                                       
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|Net Loss for the
      period             |                                                                              | (444,772) |                                               | (89,401)  |                                               | (548,795) |                                             | (543,633) |                                             | (7,367,473)
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|Basic loss per
      share                |                                                                              | (0.12)    |                                               | (0.00)    |                                               | (0.03)    |                                             | (0.00)    |                                             | (0.00)     
|Shares
      Outstanding, 6/30/02,6/30/01 |                                                                              | 3,700,951 |                                               |           |                                               |           |                                             |           |                                             |            
|Weighted Average
      Shares Outstanding |                                                                              | 71,710    |                                               |           |                                               |           |                                             |           |                                             |            
|                                          |                                                                              |           |                                               |           |                                               |           |                                             |           |                                             |             |                                                              
|                                          | Accompanying Notes
      are an Integral Part of these Financial Statements. |           |                                               |           |                                               |           |                                            





EMPYREAN
COMMUNICATIONS INC.

(A Development Stage
Company)

STATEMENT OF
STOCKHOLDERS EQUITY/(DEFICIT)

for the period ended
June 30, 2002

(Unaudited)





|                                                                    |  | Common Shares,
      issued |  | Par Value | Additional Paid
      in Capital | Deficit
      Accumulated During the Development Stage | Total      
|------------------------------------------------------------------- |  | --------------------------- |  | --------- | -------------------------------- | ------------------------------------------------------ | -----------
|Issued for Cash                                                     |  | 15,000,000                  |  | 1,000     |                                  |                                                        | 1,000      
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Net Loss for the
      period                                       |  |                             |  |           |                                  | (70,583)                                               | (70,583)   
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Balance, December
      31, 2000                                    |  | 15,000,000                  |  | 1,000     | 0                                | (70,583)                                               | (69,583)   
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Issued for cash
      pursuant to exercise of warrants - at $ 10.00 |  | 2,240                       |  | 45        | 22,355                           |                                                        | 22,400     
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Issued for
      acquisition of subsidiary                          |  | 750,000                     |  | 15,000    | 5,790,408                        |                                                        | 5,805,408  
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Net loss for the
      period                                       |  |                             |  |           |                                  | (6,748,095)                                            | (6,748,095)
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Balance, December
      31, 2001                                    |  | 15,752,240                  |  | 16,045    | 5,812,763                        | (6,818,678)                                            | (989,870)  
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Issued for debt
      extinguishments and future services           |  | 3,750,000                   |  | 3,750     | 1,020,726                        |                                                        | 1,024,476  
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Net loss for the
      period                                       |  |                             |  |           |                                  | (104,023)                                              | (104,023)  
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Balance, March 31,
      2002                                       |  | 19,502,240                  |  | 19,795    | 6,833,489                        | (6,922,701)                                            | (69,417)   
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Issued for
      controlling interest in Basalt Fiber Company       |  | 10,000,000                  |  | 10,000    | 890,000                          |                                                        | 900,000    
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Reverse Split 1:20
      on April 26, 2002 on shares outstanding    |  | -31,401,289                 |  |           |                                  |                                                        |            
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Issued for debt
      extinguishments and future services           |  | 5,600,000                   |  | 5,600     | 723,400                          |                                                        | 729,000    
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Net loss for the
      period                                       |  |                             |  |           |                                  | (444,772)                                              | (444,772)  
|                                                                    |  |                             |  |           |                                  |                                                        |            
|Balance, June 30,
      2002                                        |  | 3,700,951                   |  | 35,395    | 8,446,889                        | (7,367,473)                                            | 1,114,811  
|*See accompanying
      Notes to the Financial Statements           |  |                             |  |           |                                  |                                                        |            





Item 2. Management's
Plan of Operation.

The company is in its
initial stages of development with no revenues or income and is subject to all
the risks inherent in the creation of a new business. Since the company's
principal activities to date have been limited to organizational activities,
prospect development, and acquisitions of interest, it has no record of
revenue-producing operations. Consequently, there is no operating history upon
which to base an assumption that the company will be able to achieve its
business plans.



With the purchase of the
two fiber related companies in February 2002, the Company's business focus has
been to obtain the funding required to commence the manufacture and sale of
continuous basalt fiber and related products.



Its wholly owned
subsidiary, Basalt Fiber Company, has an 11,000 sq. ft. factory on lease in
South Hill, Virginia and management is fully primed to install manufacturing
facilities as soon as financing is obtained. Production of basalt fiber is
expected to commence within one (1) year of financing being obtained and,
assuming such financing, conservative gross sales revenues are projected to be
in excess of $2.50 million in the second year and could exceed $8.50 million by
the fifth year.



In brief, basalt fiber
is the newest fiber application technology available in the Western Hemisphere.
Basalt Fiber can effectively replace fiberglass in all its applications. It is
also stronger, ecologically safer and more cost effective than fiberglass. As
the properties of basalt fiber appear to be superior than fiberglass, it will
command premium prices for all products. The uses of basalt fiber include its
application in industry, the military, local law enforcement and fire safety.
Furthermore, basalt fiber's superior strength and advanced thermal properties
will aid in the construction of much stronger and more fire resistant
structures. It can also be used to enhance fire resistant apparel for
firefighters, and stronger bulletproof vests for law enforcement personnel.



The company's other
wholly owned subsidiary, Belfiber Corporation, had entered into an agreement to
purchase all of the assets of Air Purator Corporation (APC), subject to certain
conditions. The company was unable to fulfill all the conditions of the
agreement and the purchase of APC did not occur. Belfiber will continue to seek
other business opportunities, but will not receive any revenues from APC or its
products. This event could adversely affect the operating revenue of the Company
for 2002.



Principal Product



As previously reported,
the Company has completely divested itself from the telecommunications bandwidth
business. The intangible assets related to this business have been completely
written off in the company's Audited Financial Statements for the period
ending December 31, 2001.



The company's
principal business will be derived from its wholly owned subsidiary, Basalt
Fiber Company, to manufacture continuous fiber products for resale in the world
market. From start up, the company is expected to grow at a 20% to 25% rate and
the following is a list of main objectives to be pursued:

- provide the Company with market
    presence, which is necessary to support production, marketing and sales
    goals and to attract customers from the niche markets for its basalt fiber
    products
- generate a fair return for
    shareholders and finance continued growth and development of quality
    products with earned profits
- have sales of more than $8.50
    million by the fifth year .
- achieve a gross margin of 73%
    and, with checks and balances in place, to maintain this level
- continue research and development
    into the next generation of fiber products and
- achieve a steady and reliable
    production stream



Liquidity



During the next 12
months, the company will need significant working capital to fund its marketing
efforts and to commence the manufacture of basalt fiber products. The Company is
vigorously pursuing financing from domestic and foreign banks and also from
private investment groups overseas. During July 2002, top management visited and
commenced working with leading banks and several private investment groups in
Panama and progress to date is very promising.





PART II - OTHER
INFORMATION



Item 5. Other
Information



Acquisition andDisposition
of Assets:



As the Company has
completely ceased doing any business in the telecommunications bandwidth market
and all the assets pertaining to this business have been fully written down, in
keeping with new accounting rules and regulations pertaining to the treatment of
intangible assets in its Audited Financials for the period ending December31,
2001, the Company does not intend to pursue the bandwidth contract it previously
had with Vnet Investment Company.



Board Meetings:



The Board of Directors
at a Special meeting held in Houston, TX on June 4, 2002 approved the issuance
of 1,600,000 common shares for prepaid legal fees, and in lieu of future
consulting expenses. Shares were issued as follows:



George Burks - 200,000
shares for Prepaid legal fees of $18,000

James B. Parsons -200,000
shares for Prepaid legal fees of $18,000

Dale A. Renaud- 200,000
shares for Prepaid Consulting fees of 18,000

Anthony Fanale- 500,000
shares for Prepaid Consulting fees of $54,000

Robert L. Lee -
500,000 shares for Prepaid Consulting fees of $54,000



The Board of Directors
at this meeting also accepted the resignation of Mr. Dale A. Renaud from the
Board of Directors effective May 22, 2002 and thanked him for his services to
the company.



Item 6. Exhibits and
Reports on

> Exhibit No.
>         Document
>         Location3(i)
>         Articles of Incorporation
>         Previously Filed3(ii)
>         BY Laws
>         Previously filed
>     
>     
>     ________________________________________________________________________
>     Reports on 8-K
>   
>   On May 22,2002, the
>   company filed a Current Report on Form 8-K reporting on Item 5- Other Events
>   and Item 6- resignation of Directors.

SIGNATURES



In accordance with the
requirements of the Exchange Act, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



EMPYREAN COMMUNICATIONS,
INC.







/s/ Robert L.
lee                            
Date August 9, 2002

Robert L. Lee,
President and Director







/s/ Anthony Fanale                    
Date August 9, 2002

Anthony Fanale, Director