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 Quarter Ended: June 30, 2002; or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

              For the transition period _________ to __________

                    Commission File Number: 000-26261

                     AMERICAN FIRE RETARDANT CORP.

             (Exact name of Registrant as specified in its charter)


            NEVADA                                            88-03826245
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification No.)

9337 Bond Avenue, El Cajon, California                          92021
 (Address of principal executive offices)                      Zip Code)

                                 (619) 390-6888
           (Registrant's telephone number, including area code)

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

     On June 30, 2002 there were 76,981,877 shares of the registrant's
Common Stock, $0.001 par value, issued and outstanding.

     Transitional Small Business Disclosure Format: Yes [ ] No [X]

This Form 10-QSB has 24 pages; the Exhibit Index is located at page 18.

                                INDEX TO FORM 10-QSB
                                  June 30, 2002

PART I. Financial Information                                        Page No.

Item 1 Financial Statements

Condensed Balance Sheets as of June 30, 2002 (unaudited) and as of
December 31, 2001                                                           4

Condensed Statements of Operations (unaudited) for the three months
ended June 30, 2002 and 2001                                                6

Condensed Statements of Stockholders' Equity for the three months
ended June 30, 2002 and 2001(unaudited)                                     7

Condensed Statements of Cash Flows (unaudited) for the three months
ended June 30, 2002 and 2001                                                9

Notes to Financial Statements                                              11

Item 2 Management's Discussion and Analysis of Financial
Condition or Plan of Operation                                             12

PART II. Other Information

Item 1. Legal Proceedings                                                  17
Item 2. Changes in Securities                                              17
Item 3. Defaults Upon Senior Securities                                    17
Item 4. Submission of Matters to a Vote of Security Holders                18
Item 5. Other Information                                                  18
Item 6. Exhibits and Reports on Form 8-K                                   18

Signatures                                                                 22

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The financial statements included herein have been prepared by the
Company, without audit pursuant to the rules and regulations of the
United States Securities and Exchange Commission (the "Commission").
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.

Set forth below are the balance sheets as of June 30, 2002
(unaudited) and December 31, 2001, and the results of operations for
the three months and six months ended June 30, 2002 and
2001(unaudited) and cash flows for the six months ended June 30, 2002
and 2001.  In the opinion of the Company, all adjustments, consisting
of only normal recurring adjustments, necessary to present fairly the
financial position of the Company as of June 30, 2002, and the
results of its operations and changes in its financial position for
the period then ended, have been made. The results of operations for
such interim period is not necessarily indicative of the results to
be expected for the entire year.

All other schedules are not submitted because they are not applicable
or not required or because the information is included in the
financial statements or notes thereto.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                       AMERICAN FIRE RETARDANT CORPORATION
                                 Balance Sheets
                                   (Unaudited)

                                     ASSETS

                                                June 30         December 31
                                                  2002             2001

CURRENT ASSETS
Cash                                            $     5,270     $         -
Inventory                                            47,347          87,594
Accounts receivable, net                            307,987         419,046

Total Current Assets                                360,604         506,640

PROPERTY AND EQUIPMENT, NET                          80,994         187,942

OTHER ASSETS
Restricted cash                                     432,024         419,138
Intangible assets, net                               11,340          16,500
Deposits and other assets                            14,349          14,349

Total Other Assets                                   457,713        449,987

TOTAL ASSETS                                         899,311      1,144,569

                    LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

CURRENT LIABILITIES
Cash overdraft                                              -        20,826
Accounts payable                                      343,669       337,146
Accrued expenses                                    1,298,664     1,207,208
Shareholder loans                                     221,520       231,573
Notes payable, current portion                        282,091       286,035
Capital leases, current portion                         5,866         5,866
Line of credit                                      1,878,366     1,822,340

Total Current Liabilities                           4,030,176     3,910,994

LONG-TERM LIABILITIES
Notes payable                                         149,112       150,662
Capital leases, long-term portion                      14,210        14,210

Total Long-Term Liabilities                           163,322       164,872

Total Liabilities                                   4,193,498     4,075,866

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS? EQUITY (DEFICIT)

Common stock, $0.001 par value; 100,000,000
shares authorized, 76,981,877 and 17,806,877 shares
issued and outstanding, respectively                   76,982       17,808
Additional paid-in capital                          6,620,839    3,652,214
Deferred compensation                              (1,657,805)           -
Accumulated deficit                                (8,334,203)  (6,601,319)

Total Stockholders Equity (Deficit)                (3,294,187)  (2,931,297)

TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT)                                      899,311    1,144,569

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

                       AMERICAN FIRE RETARDANT CORPORATION
                          Statements of Operations
                                (Unaudited)



<TABLE>
<CAPTION>
                                   For the Six Months Ended June 30      For the Three Months Ended June 30
                                       2002               2001                   2002          2001
<S>                                  <C>                <C>                   <C>             <C>
NET SALES                          $   600,126           $ 1,588,285          $   326,405   $   745,093

COST OF SALES                          253,734               841,186              125,837       418,134

GROSS MARGIN                           346,392               747,099              200,568       326,959

EXPENSES
Selling, general and administrative  1,692,501               760,106            1,222,376       582,577
Payroll expense                         78,210               295,340               41,933       139,951
Travel and entertainment                51,303               108,417               23,069        49,568
Depreciation and amortization
Expense                                 32,634                34,838               15,369        14,919
Bad debt expense                           585                27,869                  585        27,869

Total Expenses                       1,855,233             1,226,570            1,303,332       814,884

LOSS FROM OPERATIONS                (1,508,841)             (479,471)          (1,102,764)      (487,925)

OTHER INCOME (EXPENSES)
Loss on disposal of assets             (30,101)                    -              (30,101)             -
Rental Income                            6,000                     -                4,500              -
Miscellaneous Income                       422                     -                  422              -
Interest expense                      (200,364)             (240,634)             (87,866)      (107,778)

Total Other Income (Expenses)         (224,043)             (240,634)            (113,045)      (107,778)

LOSS BEFORE INCOME TAXES            (1,732,884)             (720,105)          (1,215,809)      (595,703)

PROVISION FOR INCOME TAXES                   -                     -                    -              -

NET LOSS                            (1,732,884)             (720,105)          (1,215,809)      (595,703)

BASIC LOSS PER SHARE                     (0.04)                (0.26)               (0.02)         (0.22)

BASIC WEIGHTED AVERAGE SHARES        42,591,242             2,730,591          55,482,287       2,765,801
</TABLE>



                            AMERICAN FIRE RETARDANT CORPORATION
                      Statements of Stockholders' Equity (Deficit)



<TABLE>
<CAPTION>
                                   Common Stock         Additional      Deferred     Accumulated
                                                          Paid-in       Compensation  (Deficit)
                                Shares        Amount      Capital
<S>                             <C>           <C>         <C>           <C>          <C>
Balance, December 31, 2001      $17,806,877   $    17,808 $ 3,652,214   $         -  $(6,601,319)

January 8, 2002 common stock
 issued for services at $0.09
 per share (unaudited)            3,000,000         3,000     267,000      (270,000)           -

January 14, 2002 common stock
 issued for services at $0.08
 per share (unaudited)              250,000           250      19,750       (20,000)           -

January 15, 2002 common stock
 issued for services at $0.07
 per share (unaudited)            1,000,000         1,000      69,000       (70,000)           -

January 18, 2002 common stock
 issued for services at $0.08
 per share (unaudited)            1,000,000         1,000      79,000       (80,000)           -

January 23, 2002 common stock
 issued for services at $0.08
 per share (unaudited)              350,000           350      27,650       (28,000)           -

January 28, 2002 common stock
 issued for services at $0.07
 per share (unaudited)            3,000,000         3,000     207,000      (210,000)           -

February 2, 2002 common stock
 issued for services at $0.06
 per share (unaudited)            1,500,000         1,500       88,500            -            -

February 20, 2002 common stock
 issued for services at $0.04
 per share (unaudited)            2,500,000         2,500       97,500      (100,000)          -

February 27, 2002 common stock
 issued for services at $0.03
 per share (unaudited)            2,350,000         2,350       68,150       (70,500)          -

March 19, 2002 common stock
 issued for cash at $0.05
 per share (unaudited)            3,520,000         3,520      172,480             -           -

March 22, 2002 common stock
 issued for cash at $0.05
 per share (unaudited)              100,000            100       4,900             -           -

April 9, 2002 common stock
 issued for services at $0.04
 per share (unaudited)              350,000            350      13,650             -           -

April 19, 2002 common stock
 issued for services at $0.06
 per share (unaudited)            10,000,000        10,000     590,000      (120,000)          -

April 19, 2002 common stock
 issued for cash at $0.05
 per share (unaudited)               510,000           510      24,990             -           -

May 2, 2002 common stock
 issued for services at $0.06
 per share (unaudited)             6,000,000         6,000     354,000      (360,000)          -

Balance Forward                   53,236,877       $53,238  $5,735,784   $(1,328,500)$(6,601,319)

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

Balance Forward                   53,236,877       $53,238    $5,735,784 $(1,328,500)$(6,601,319)

May 17, 2002 common stock
 issued for services at $0.05
 per share (unaudited)             5,000,000         5,000        245,000    (250,000)         -

May 17, 2002 common stock
 issued for services at $0.05
 per share (unaudited)               200,000           200          9,800           -          -

May 24, 2002 common stock
 issued for services at $0.04
 per share (unaudited)               500,000           500         19,500           -          -

May 28, 2002 common stock
 issued for services at $0.04
 per share (unaudited)             8,000,000         8,000         312,000   (320,000)         -

June 21, 2002 common stock
 issued for services at $0.03
 per share (unaudited)             2,000,000         2,000          58,000           -          -

June 27, 2002 common stock
 issued for services at $0.03
 per share (unaudited)             7,500,000         7,500          217,500   (225,000)         -

June 28, 2002 common stock
 issued for services at $0.04
 per share (unaudited)               345,000           344           13,455          -          -

June 28, 2002 common stock
 issued for cash at $0.05
 per share (unaudited)               200,000           200            9,800          -          -

Amortization of deferred
 compensation (unaudited)                  -             -                -    465,695          -

Net loss for the three months
 ended June 30, 2002 (unaudited)           -             -                -          - (1,732,884)

Balance, June 30, 2002
 (unaudited)                     $76,981,877    $   76,982      $ 6,620,839 $(1,657,805) $(8,334,203)
</TABLE>



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

                             AMERICAN FIRE RETARDANT CORPORATION
                                 Statements of Cash Flows
                                       (Unaudited)
                                                       For the Six Months Ended
                                                                 June 30
                                                           2002       2001

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                $(1,732,884) $(720,105)
Adjustments to reconcile net loss to net cash
 provided (used) by operating activities:
Common stock issued for services                            677,800    342,780
Amortization of deferred compensation                       465,695          -
Depreciation and amortization                                32,634     34,838
Loss on disposal of assets                                   30,101          -

Change in Assets and Liabilities:
(Increase) decrease in accounts receivable                  111,059   (263,984)
(Increase) in deposits                                            -       (800)
(Increase) decrease in inventory                             40,247    (44,736)
Decrease in prepaid expenses and intangibles                    660      5,650
(Increase) in restricted cash                               (12,886)  (108,795)
Decrease in accounts payable                                   6,523    49,892
Increase in accrued expenses                                  91,456    51,837
Decrease in unearned revenue                                       -   (60,810)

Net Cash Used by Operating Activities                       (289,595) (714,233)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets                                           -   (24,250)
Net Cash Used by Investing Activities                              -   (24,250)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft                        (20,826)   29,818
Proceeds from notes payable - related                              -    59,140
Payments on notes payable - related                          (10,053)  (14,830)
Proceeds from sale of common stock                           226,500         -
Proceeds from notes payable                                   45,318   257,347
Proceeds from lines of credit                                 56,026   473,024
Payment on notes payable                                      (2,100)  (66,016)

Net Cash Provided by Financing Activities                    294,865   738,483

NET INCREASE IN CASH                                           5,270         -

CASH AT BEGINNING OF PERIOD                                        -         -

CASH AT END OF PERIOD                                          5,270         -

SUPPLEMENTAL CASH FLOW INFORMATION

CASH PAID FOR:

Interest                                                     200,364   240,634
Income taxes                                                       -         -

NON-CASH FINANCING ACTIVITIES

Common stock issued for conversion of accrued salaries             -    80,000
Common stock issued for services                             677,800   545,266
Common stock issued for deferred services                  2,123,500         -

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

                       AMERICAN FIRE RETARDANT CORPORATION
                        Notes to the Financial Statements
                      June 30, 2002 and December 31, 2001

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the
Company without audit.  In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash
flows at June 30, 2002 and 2001 and for all periods presented have
been made.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
December 31, 2001 audited financial statements. The results of
operations for the periods ended June 30, 2002 and 2001 are not
necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

These financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business over a reasonable length of time. The
Company has an accumulated deficit of $8,334,203 which, as well as
current liabilities in excess of current assets of $3,669,572, raise
substantial doubt about its ability to continue as a going concern.

Management is presently pursuing plans to increase sales volume,
reduce administrative costs, and improve cash flows as well as obtain
additional financing through stock offerings. The ability of the
Company to achieve its operating goals and to obtain such additional
finances, however, is uncertain. The accompanying financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.

NOTE 3 - STOCK ISSUED FOR SERVICES

During the first and second quarters of 2002, the Company has issued
59,085,000 shares of its common stock.  The majority of the shares
have been for services to the Company.

Some of the shares were issued for service contracts that are to be
performed in the future.  The issuance of these shares for the future
service contracts has resulted in $1,657,805 in deferred compensation
as of June 30, 2002.

NOTE 4 - FORECLOSURE ON LAND AND BUILDING

In May 2002, one of the Company's creditors foreclosed on their note
to the Company.  The note was secured by land and a building.  The
Company has recorded a loss on the disposal of this property of
$30,101.  Since the fair value of the property exceeded the amount of
the note to the creditor, the Company believes there will be no
further recourse against the Company in this matter.

Item 2. Management's Discussion and Analysis or Plan of Operations.

Forward Looking Statements

Certain statements contained in this report that are not historical
fact are "forward-looking statements " as that term is defined in the
Private Securities Litigation Reform Act of 1995. The words or
phrases "will likely result," "are expected to," "will continue, "
"is anticipated, " "believes, " "estimates, " "projects" or similar
expressions are intended to identify these forward-looking
statements. These statements are subject to risks and uncertainties
beyond our reasonable control that could cause our actual business
and results of operations to differ materially from those reflected
in our forward-looking statements. The safe harbor provisions
provided in the Securities Litigation Reform Act do not apply to
forward-looking statements we make in this report. Forward-looking
statements are not guarantees of future performance. Our forward-
looking statements are based on trends that we anticipate in our
industry and our good faith estimate of the effect on these trends of
such factors as industry capacity, product demand and product
pricing. The inclusion of projections and other forward-looking
statements should not be regarded a representation by us or any other
person that we will realize our projections or that any of the
forward-looking statements contained in this prospectus will prove to
be accurate.

The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto appearing elsewhere
herein. The notes accompanying the financial statements are an
integral part of our financial statements for December 31, 2001 and
June 30, 2002

Changes in Financial Condition

The balance of current assets at December 31, 2001 was $506,640
compared to a balance of $360,604 at June 30, 2002. The balance of
current liabilities was $3,910,994 and $4,030,176, respectively, for
the same periods. The resulting current ratio at December 31, 2001
was .14 to 1. The current ratio at June 30, 2002 was .09 to 1. The
current ratio indicates that the Company's ability to pay its
obligations has stayed constant over the course of the second quarter
of 2002.

The decrease of current assets at June 30, 2002 from December 31,
2001 is the result of a net decrease in accounts receivable and
reduction of inventory.  The decrease in accounts receivable is due
to an increase in the allowance for doubtful accounts and an increase
in collection efforts by the Company.

The other material component of current assets is accounts
receivable. The balance of accounts receivable at June 30, 2002 was
$307,987, a decrease of $111,059. The receivables decreased due to
better collection efforts by the Company and an increase in allowance
for doubtful accounts.

The balance of current liabilities at December 31, 2001 was
$3,910,994 compared to a balance of $4,030,176 at June 30, 2002. The
increase in current liabilities of $119,182 is mainly due to an
increase in accrued expenses. The line of credit extended to the
Company increased by $56,026, or 3.07% from December 31, 2001 to the
end of the second quarter 2002 due to an accrual for interest.  The
Company used cash of $289,595 in its operations as it continues to
focus itself as a market leader in the fire retardant industry.

$502,365 of the Company's accrued expenses were past due payroll
taxes owed to the Internal Revenue Service ("IRS") and several states
where the Company does business. The Company previously submitted
Offers in Compromise to the IRS which were voided in the second
quarter of 2001. The Company has negotiated an installment plan with
the IRS and is current on its payroll tax obligations for the year
2002.

At June 30, 2002 the Company needed approximately $2,500,000 in
working capital to bring itself out its present situation and back
onto an even footing with its creditors. The Company hopes to raise
this capital through the sale of its new consumer product in 2002 and
through continued efforts at obtaining outside financing.

Results of Operations

For the three months ended June 30, 2002 compared to the three months
ended June 30, 2001.

The Company's net sales decreased by $418,688 through June 30,2002
compared to the same period in 2001. This is a decrease of 56.2% and
is mainly due to the Company working one large job and the
elimination of small fabric treatment jobs. The gross margin for the
period in 2002 was 61.4% of sales compared to 43.9% for the same
period in 2001.  This increase was due to underestimating material
required for the one large job.

The Company's selling, general and administrative expenses increased
by $639,799 or 110% for the period ended June 30, 2002 over the same
period in 2001, mainly due to expenses incurred for consulting
services in regard to the Company's common stock. Payroll expenses
have decreased by $98,018 for the year to date period or 70.0%, as
compared with the same period in 2001.  This decrease reflects a
tightening by management on its payroll.

For the six months ended June 30, 2002 compared to the six months
ended June 30, 2001.

The Company's net sales decreased by $988,159 through June 30, 2002
compared to the same period in 2001.  This is a decrease of 62.2% and
is mainly due to the Company working one large job and the
elimination of small fabric treatment jobs.  The gross margin for the
period in 2002 was 57.8% of sales compared to 47.0% for the same
period in 2001.  This increase was due to underestimating material
required for the one large job.

The Company's selling, general and administrative expenses increased
by $932,395 through June 30, 2002 compared to the same period in
2001, mainly due to expenses incurred for consulting services in
regard to the Company's common stock.  Payroll expenses have
decreased by $217,130 for the year-to-date period or 73.5%, as
compared with the same period in 2001.  This decrease reflects a
tightening by management on its payroll.

Management is seeking to increase the Company's marketing efforts in
the coming year. However, the Company is subject to the current
economic decline and risks associated with the decline in the use of
construction materials and fire retardant chemical products
associated with the construction.

Risk Factors

Several of the matters discussed in this document contain forward-
looking statements that involve risks and uncertainties. Factors
associated with the forward-looking statements that could cause
actual results to differ materially from those projected or
forecasted appear in the statements below. In addition to other
information contained in this document, readers should carefully
consider the following cautionary statements and risk factors:

We May Face Interruption Of Production And Services Due To Increased
Security Measures In Response To Terrorism.

Our business depends on the free flow of products and services
through the channels of commerce. Recently, in response to
terrorists' activities and threats aimed at the United States,
transportation, mail, financial and other services have been slowed
or stopped altogether. Further delays or stoppages in transportation,
mail, financial or other services could have a material adverse
effect on our business, results of operations and financial
condition. Furthermore, we may experience an increase in operating
costs, such as costs for transportation, insurance and security as a
result of the activities and potential activities. We may also
experience delays in receiving payments from payers that have been
affected by the terrorist activities and potential activities.  The
U.S. economy in general is being adversely affected by the terrorist
activities and potential activities and any economic downturn could
adversely impact our results of operations, impair our ability to
raise capital or otherwise adversely affect our ability to grow our
business.

Future Capital Requirements; Uncertainty of Future Funding.

The Company's plan of operation calls for additional capital to
facilitate growth and support its long-term development and marketing
programs. It is likely that the Company would need to seek additional
financing through future public or private sales of its securities,
including equity securities. The Company may also seek funding for
the development and marketing of its products through strategic
partnerships and other arrangements with investment partners. There
can be no assurance, however, that such collaborative arrangements or
additional funds will be available when needed, or on terms
acceptable to the Company, if at all. Any such additional financing
may result in significant dilution to existing stockholders. If
adequate funds are not available the Company may be required to
curtail one or more of its future programs.

Substantial Doubt that the Company Can Continue as a Going Concern.

The Company expects to continue to incur significant capital expenses
in pursuing its plans to increase sales volume, expanding its product
line and obtaining additional financing through stock offerings or
other feasible financing alternatives. In order for the Company to
continue its operations at its existing levels, the Company will
require $700,000 of additional funds over the next twelve months.
While the Company can generate funds necessary to maintain its
operations, without these additional funds there will be a reduction
in the number of new projects that the Company could take on, which
may have an effect on the Company's ability to maintain its operations.

Therefore, the Company is dependent on funds raised through equity or
debt offerings. Additional financing may not be available on terms
favorable to the Company, or at all. If these funds are not available
the Company may not be able to execute its business plan or take
advantage of business opportunities. The ability of the Company to
obtain such additional financing and to achieve its operating goals
is uncertain. In the event that the Company does not obtain
additional capital or is not able to increase cash flow through the
increase of sales, there is a substantial doubt of its being able to
continue as a going concern.

Additionally, it should be noted that the Company's independent
auditors have included a going concern opinion in the note to the
financial statements. The auditor's have included this provision
because the Company has an accumulated deficit that the auditor
believes raises substantial doubt about the Company's ability to
continue as a going concern. Until such time as the Company does
receive additional debt or equity financing, there is a risk that the
Company's auditors will continue to include a going concern provision
in the notes to financial statements.

Patents and Proprietary Rights.

The Company relies on patents, contractual rights, trade secrets,
trademarks, and copyrights to establish and protect its proprietary
rights in its products and its components. The Company has patented
the technology that is incorporated into its products and believes
that, since it is a technology patent, competitors will have a more
difficult time developing products functionally similar to the
Company's. To further protect its products, the Company will apply
for additional patents for its inventions and non-commercial
available components designed and developed by the Company

Prosecuting Intellectual Property Infringement Claims Could Be
Expensive and Could Disrupt Business.

The Company intends to closely monitor competing product
introductions for any infringement of the Company's proprietary
rights. The Company believes that, as the demand for products such as
those developed by the Company increase, infringement of intellectual
property rights may also increase. If infringement of the Company's
proprietary rights is by industry competitors, they have
substantially greater financial, technical, and legal resources than
the Company, which could adversely affect the Company's ability to
defend its rights. In addition, the Company could incur substantial
costs in defending its rights.

Further, the Company's patents are U.S. patents, and the Company does
not have patent protection outside the United States. The Company
will be unable to obtain patent protection in most Non-U.S.
jurisdictions, including Europe and Japan. Some competitors may have
operations in Non-U.S jurisdictions where U.S. Patent rights are not
effective. This could permit competitors to infringe on the Company's
proprietary rights without violating U.S. law.

The Company anticipates that based on the size and sophistication of
its competitors and the history of the industry's rapid technological
advances, which several competitors may be working to develop the
Company's patented technology. The Company intends to closely monitor
any infringement of the Company's proprietary rights. Competitors may
have patent applications in progress in the United States that, if
issued, could relate to the Company's products. If such patents were
to issue, there can be no assurance that the patent holders or
licensees will not assert infringement claims against the Company or
that such claims will not be successful. The Company could incur
substantial costs in defending itself and its customers against any
such claims, regardless of the merits. Parties making such claims may
be able to obtain injunctive or other equitable relief that could
effectively block the Company's ability to sell its products, and
each claim could result in an award of substantial damages. In the
event of a successful claim of infringement, the Company and its
customers may be required to obtain one or more licenses from third
parties. There can be no assurance that the Company or its customers
could obtain the necessary licenses from third parties or at a
reasonable or acceptable cost. Patent litigation could be very
expensive, and there is no assurance that it would not have an
adverse effect on the Company's business, financial condition and
results of operations.

Dependence on Key Employees.

Historically, the Company has been heavily dependent on the ability
of Stephen F. Owens and Bruce E. Raidl to contribute essential
technical and management experience. In the event of future growth in
administration, marketing, manufacturing and customer support
functions, the Company may have to increase the depth and experience
of its management team by adding new members. The Company's success
will depend to a large degree upon the active participation of its
key officers and employees. Loss of services of any of the current
officers and directors could have a significant adverse effect on the
operations and prospects of the Company. There can be no assurances
that it will be able to employ qualified persons on acceptable terms
to replace officers that become unavailable.  Furthermore, the
Company has not entered into employment agreements with any member of
management or other key personnel to assure the continued employment
of such personnel for our management and operations.

Need for Additional Specialized Personnel.

Although the management of the Company is committed to the business
and continued development and growth of the business, the addition of
specialized key personnel and sales persons to assist the Company in
its expansion of its national operations will be necessary. There can
be no assurances that the Company will be able to locate and hire
such specialized personnel on acceptable terms.

Competition

There are numerous corporations, firms and individuals that are
engaged in the type of business activities that the Company is
presently engaged in. Many of those entities are more experienced and
possess substantially greater financial, technical and personnel
resources than the Company. While the Company hopes to be competitive
with other similar companies, there can be no assurances that such
will be the case.

Ability to Maintain Adequate Inventory Levels

The size of the fire retardant and fire protection markets and the
need to maintain adequate inventories regarding such products could
force the Company into implementing additional manufacturing and
warehousing programs. There can be no assurances that the Company
will have the necessary capital resources or manpower to implement
such manufacturing and warehousing programs.

Dependence on Ability to Market Products and Services

Due to the Company's limited resources, the sales and marketing of
its products has been limited to date. The success of the Company is
dependent upon its ability to market and sell the products and
services of the Company with such limited resources.

Risk That The Company's Common Stock May Be Deemed A "Penny Stock"

The Company's common stock is a "penny stock" as that term is defined
in Reg. Section 240.3a51-1 of the Securities and Exchange Commission.
Penny stocks are stocks (i) with a price of less than five dollars
per share; (ii) that are not traded on a "recognized" national
exchange; (iii) whose prices are not quoted on the NASDAQ automated
quotation system (NASDAQ-listed stocks must still meet requirement
(i) above); or (iv) of an issuer with net tangible assets less than
US$2,000,000 (if the issuer has been in continuous operation for at
least three years) or US$5,000,000 (if in continuous operation for
less than three years), or with average annual revenues of less than
US$6,000,000 for the last three years.

Section 15(g) of the 1934 Act and Reg. Section 240.15g-2 of the
Commission require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of
the document before effecting any transaction in a penny stock for
the investor's account. Potential investors in the Company's common
stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."

Moreover, Reg. Section 240.15g-9 of the Commission requires broker-
dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to (i) obtain
from the investor information concerning his or her financial
situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in
penny stocks are suitable for the investor and that the investor has
sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the
investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv)
receive a signed and dated copy of such statement from the investor,
confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for
investors in the Company's common stock to resell their shares to
third parties or to otherwise dispose of them.

In the event that the Company's stock is deemed a penny stock, it
could limit and inhibit an investor from buying the Company's stock
because the procedures that an investor and broker must adhere to may
be viewed as too burdensome by the investor. Additionally, because
the Company's stock may be designated as a penny stock, prior to the
sale of a penny stock that was recommended by the broker and to an
investor who is not an institutional accredited investor, the broker
must approve the customer's account for transaction in penny stocks
in accordance with the rules outlined above. The time, effect and
burden in approving a customer's account to be approved for trading
in penny stocks could hamper or limit the market for the Company's
common stock as broker-dealers may be less inclined to recommend an
investment to a new customer in a penny stock.

PART II - OTHER INFORMATION.

Item 1. Legal Proceedings.

     In the ordinary course of the Company's business, disputes arise
involving the Company's business and operations. The following
represents pending or threatened litigation and administrative
actions that the Company believes to be material to its financial
condition and operations.

Friloux v. AFRC The Company is a party defendant in the matter of
Friloux v. American Fire Retardant Corporation, 15th Judicial
District Court, Parish of Lafayette, Louisiana, Docket No. 99-5744
"D". In this matter Mr. Friloux filed a Petition seeking a pre-trial
judgment alleging (1) that the Company is indebted to Mr. Friloux
under the terms of a promissory note dated March 7, 1994, in the
principal sum of $100,000 with interest thereon at the rate of 5.0%
per annum, and that the Company is in breach of said promissory note;
(2) that the Company is in breach of an employment contract with Mr.
Friloux and is obligated to pay Mr. Friloux back wages; (3) that the
Company is indebted to Mr. Friloux for past due health and
hospitalization costs due under the alleged employment agreement; and
(4) that the Company is indebted to Mr. Friloux as a result of the
sale by Mr. Friloux of shares of common stock owned by Mr. Friloux
back to the Company. The Company filed exceptions to the petition and
counsel for both parties has agreed that any and all claims shall be
disposed of at trial rather than through Mr. Friloux's pre-trial
petition. The Company denies the allegations and intends to
vigorously defend the complaint of Mr. Friloux. At present, Mr.
Friloux and the Company are attempting to resolve this matter
amicably in order to avoid further costs to either party.

Delinquent Payroll Taxes - The Company owes the Internal Revenue
Service $297,224 including interest for prior delinquent payroll
taxes by the Company's former subsidiaries, AFRC Florida and AFRC
Louisiana. These payroll taxes became delinquent starting in the 3rd
quarter of 1997 and going through the 4th quarter of 1998. The total
delinquent payroll tax liabilities attributed to AFRC Florida are
$128,604 and $168,621 attributed to AFRC Louisiana. The Company has
retained the tax counsel of J. W. Roysten, E.A. in Lafayette,
Louisiana to represent the Company before the Internal Revenue
Service and the Company had submitted an Offer-in-Compromise to
obtain a substantial reduction of the outstanding payroll tax balance
due. The Company is keeping current with all present payroll and
other tax obligations.

Settlement of ARFC Louisiana and AFRC Florida Payroll Tax Liabilities
- The Internal Revenue Service had tentatively accepted two offers-
in-compromise for settlements of the federal payroll tax liabilities
owed by the Company's former subsidiaries, AFRC Louisiana and AFRC
Florida. The Internal Revenue Service has voided those two offers-in-
compromise due to the delinquent taxes currently owed by the Company.

As stated under the Delinquent Payroll Taxes section, the Company has
retained the services of J. W. Roysten, E.A. to represent it before
IRS in these matters. He is currently negotiating an installment plan
for the Company that will cover the liabilities for AFRC Louisiana,
AFRC Florida, and AFRC Nevada. It is anticipated that the
negotiations will be completed within 60 days. No details are
available since no agreement has yet been reached with the Internal
Revenue Service.

Payroll Tax Still Owing. The Company still owes the IRS $10,279.22,
including interest and penalties, for the 4th quarter 1999,
$47,452.24, including interest and penalties, for the 1st quarter
2000, $48,347.37, including interest and penalties, for the 2nd
quarter 2000, and $44,179.67 including interest and penalties, for
the 3rd quarter 2000, and $39,210.04 including interest and
penalties, for the 4th quarter 2000, $45,186.21, not including
interest and penalties, for the 2nd quarter 2001.

With the exception of the legal proceedings and tax matter set forth
above, the Company is not presently a party to any litigation, claim,
or assessment.  Further, the Company is unaware of any unasserted
claim or assessment, which will have a material effect on the
financial position or future operations of the Company.

Item 2. Changes in Securities.

During the first and second quarters of our current fiscal year, we
issued a total of 59,085,000 shares of our common stock, par value
$.001 per share, primarily in exchange for services rendered to the
Company.  Such shares are, or in certain cases will be, registered on
Form S-8 for issuance to consultants and employees.  Shares issued
for services to consultants and employees were valued at the bid
price of our common stock as quoted on the Electronic Bulletin Board
maintained by the NASD on the date of issuance, at a low price of
$.01 and a high price of $.06 per share.  A full description of the
dates, quantities and prices of the issuances of shares during the
first and second quarter of our current fiscal year is set forth on
pages 7 and 8 of this Form 10-QSB, and is incorporated into this Item
2 by reference thereto.

Item 3. Defaults Upon Senior Securities.

Not required.

Item 4. Submission of Matters to a Vote of Security Holders.

On May 23, 2002, the Company conducted an annual meeting of its
shareholders pursuant to the solicitation of proxies and notice duly
given for such meeting.  During the annual meeting, three directors
nominated and recommended for election were elected according to the
provisions of the Company's by-laws.  Directors elected at the
meeting included Angela M. Raidl, Stephen F. Owens and Raoul L.
Carroll, all of whom were elected for a term of one year and until
their successors are elected and qualified as directors

Additional matters were voted upon at the meeting in addition to the
election of directors.  Management recommended the approval of an
amendment to Article V of the Certificate of Incorporation to
implement a one-for-ten reverse stock split and an amendment to
Article V of the Certificate of Incorporation to authorize 10,000,000
shares of preferred stock, par value $.001 per share.  Management
also recommended the appointment of the Company's auditors for the
fiscal year ended December 31, 2001.  Neither the reverse stock split
nor the issuance of shares of preferred stock has occurred as of the
date of this report.

The record date for the meeting was April 15, 2002.  At that date
there were 32, 756,877 shares of common stock outstanding of record.
20,681,963 shares of common stock were present at the shareholders'
meeting, either in person or by proxy.  Each of the shareholder
proposals was approved unanimously by the shares entitled to vote at
the meeting.

Item 5. Other Information.

None

Item 6. Exhibits and Reports on Form 8-K.

(a) List of Exhibits attached or incorporated by referenced pursuant
to Item 601 of Regulation S-B.

Exhibit        Description

2.1(a)(+)      Certificate of Merger from the State of Wyoming
               regarding Merger of AFRC Louisiana with and into AFRC Wyoming.

2.1(b)(+)      Certificate of Merger from the State of Louisiana
               regarding Merger of AFRC Louisiana with and into AFRC Wyoming.

2.1(c)(+)      Articles of Merger regarding Merger of AFRC Louisiana with and
               into AFRC Wyoming.

2.1(d)(+)      Acquisition Agreement and Plan of Merger regarding
               Merger of AFRC Louisiana with and into AFRC Wyoming.

2.2(a)(+)      Certificate of Merger from the State of Florida
               regarding Merger of AFRC Florida with and into AFRC Wyoming.

2.2(b)(+)      Certificate of Merger from the State of Wyoming
               regarding Merger of AFRC Louisiana with and into AFRC Wyoming.

2.2(c)(+)      Florida  Articles of Merger  regarding  Merger of
               AFRC  Louisiana with and into AFRC Wyoming.

2.2(d)(+)      Wyoming  Articles of Merger  regarding  Merger of
               AFRC  Louisiana with and into AFRC Wyoming.

2.2(e)(+)      Acquisition Agreement and Plan of Merger regarding
               Merger of AFRC Florida with and into AFRC Wyoming.

2.3(a)(+)      Articles of Merger regarding Merger regarding Merger
               of AFRC Wyoming with and into AFRC Nevada (the Company) to
               change the Domicile of the Company.

2.3(b)(+)      Acquisition Agreement and Plan of Merger regarding
               Merger of AFRC Wyoming with and into AFRC Nevada (the Company)
               to change the Domicile of the Company.

3.1(+)         Articles of  Incorporation of American Fire
               Retardant Corp. filed on January 20, 1998.

3.2(+)         Restated By-laws of American Fire Retardant Corp.

3.3(+)         Qualification  of American  Fire  Retardant  Corp.,
               as a Foreign Corporation in the State of Florida.

3.4(+)         Qualification  of American  Fire  Retardant  Corp.,
               as a Foreign Corporation in the State of Louisiana.

3.5(+)         Statement and Designation of American Fire Retardant
               Corp., as a Foreign Corporation in California.

3.6(+)         Qualification  of American  Fire  Retardant  Corp.,
               as a Foreign Corporation in the State of Colorado.

3.7(+)         Qualification  of American  Fire  Retardant  Corp.,
               as a Foreign Corporation in the State of Mississippi.

3.8(+)         Certificate of Amendment to Articles of
               Incorporation of American Fire Retardant Corp., dated January
               16, 2002.

10.1(a)(+)     Letter of Intent  between  American  Fire  Retardant
               Corp.,  and Fabritek Industries, LLC.

10.1(b)(+)     Amendment to Letter of Intent  between  American
               Fire  Retardant Corp., and Fabritek Industries, LLC.

10.2(+)        Royalty  Agreement  between  American Fire Retardant
               Corp.,  and Norman O. Houser.

10.3(+)        Sale,  Assignment and Assumption  Agreement between
               American Fire Retardant Corp. and Patrick L. Brinkman with
               regard to the purchase of manufacturing rights to De-Fyre X-238.

10.4(a)(+)     Merchant Service Agreement between American Fire
               Retardant Corp., and St. Martin Bank.

10.4(b)(+)     St. Martin Bank $100,090 Promissory Note Dated March
               11, 1997.

10.4(c)(+)     Edward E.  Friloux  Commercial  Guaranty  to St.
               Martin Bank re: $100,090 Promissory Note.

10.4(d)(+)     Stephen F.  Owens  Commercial  Guaranty  to St.
               Martin  Bank re: $100,090 Promissory Note.

10.4(e)(+)     Angela  M.  Raidl  Commercial  Guaranty  to St.
               Martin  Bank re: $100,090 Promissory Note.

10.4(f)(+)     St. Martin Bank $250,000 Promissory Note Dated May
               21, 1998.

10.4(g)(+)     St. Martin Bank Business Loan Agreement Dated August
               18, 1998.

10.4(h)(+)     St.  Martin Bank  $172,725.73  Promissory  Note
               Dated  August 18, 1998.

10.4(i)(+)     Edward E.  Friloux  Commercial  Guaranty  to St.
               Martin Bank re: $172,725.73 Promissory Note.

10.4(j)(+)     Stephen F.  Owens  Commercial  Guaranty  to St.
               Martin  Bank re: $172,725.73 Promissory Note.

10.4(k)(+)     Angela  M.  Raidl  Commercial  Guaranty  to St.
               Martin  Bank re: $172,725.73 Promissory Note.

10.4(l)(+)     St.  Martin Bank  Commercial  Pledge  Agreement  re:
               $172,725.72 Promissory Note.

10.4(m)(+)     St.   Martin  Bank  Pledge  of   Collateral
               Mortgage  Note  re: $172,725.72 Promissory Note.

10.4(n)(+)     St. Martin Bank  Agreement to Provide  Insurance re:
               $172,725.72 Promissory Note.

10.4(o)(+)     St. Martin Bank - Collateral Mortgage re:
               $172,725.72  Promissory Note.

10.4(p)(+)     St. Martin Bank - $54,059.29  Promissory  Note dated
               February 4, 1999.

10.5(a)(+)     Private  Capital,  Inc. - Purchase and Security
               Agreement  dated April 17, 1997.

10.5(b)(+)     Private  Capital,  Inc. - Angela M. Raidl
               Continuing  Guaranty & Waiver.

10.5(c)(+)     Private  Capital,  Inc. - Stephen F. Owens and
               Edward E.  Friloux Continuing Guaranty & Waiver.

10.6(a)(+)     Bank of Erath $15,030 Promissory Note Dated June 16,
               1997.

10.6(b)(+)     Bank of Erath Loan Extension Agreement Dated October
               20, 1998.

10.7(+)        American Fire Retardant Corp. - El Cajon,
               California  Industrial Lease

10.8(a)(+)     Whitney Bank - $74,400 Secured Promissory Note

10.8(b)(+)     Whitney  Bank  -  Collateral  Mortgage,  Security
               Agreement  and Assignment of Leases and Rents

10.9(+)        American  Fire  Retardant  Corp. - Standard  Lease
               for Louisiana Corporate Apartment

10.10(+)       Oil, Gas & Mineral Lease with Penwell Energy Inc.

10.11(a)(+)    Whitney National Bank - $42,888.46 Promissory Note

10.11(b)(+)    Whitney National Bank - Security Agreement

10.12(+)       Presidio Capital Consulting Agreement

10.13(+)       Warren Guidry Letter Promissory Note

10.14(a)(+)    Agreement with Richard Rosenberg

10.14(b)(+)    Amendment to Agreement with Richard Rosenberg

10.14(c)(+)    Richard Rosenberg - $43,134.39 Promissory Note

10.15(+)       Investment   Banking  and  Consulting   Agreement
               with  Capstone Partners LLC.

10.16(+)       March 7, 1999 $100,000 Promissory Note.

10.17(+)       August  25,  1999   Equipment   Lease  with
               Preferred Capital
               Corporation

10.18(+)       December 7, 1999 $100,000  Promissory Note with
               Private  Capital, Inc.

10.19(*)       Consulting Agreement dated October 1, 2001 entered
               into between American Fire Retardant Corp. and Gregory Bartko,
               Esq.

23.1(+)        Consent from HJ Associates & Consultants, LLP

99.1(+)        Consumer Product Safety Commission's Notice of
               Public Hearing and Request for Comments with regard to the
               proposed rule pertaining to Flame Retardant Chemicals that may
               be suitable for use in upholstered furniture.

99.2(+)        A copy of the Article 1998 Fire Loss in the United States
               from the NFPA Journal, September/October 1999.

99.3(+)        See  National  Fire  Data Center Statistics as
               posted on the NFDC website at
               www.usfa.fema.goc/nfdc/statistics.htm"

99.4(++)       Certification of Financial Statements by the
               Registration's Chief Executive Officer.

99.5(++)      Certification of Financial Statements by the
              Registrant's Chief Financial Officer.

(+) Previously filed.
(++) Attached hereto.

(b) Reports on Form 8-K.

There were no other reports on Form 8-K filed during the period
covered by this report.

                                    SIGNATURE

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

                                          AMERICAN FIRE RETARDANT CORP.
                                          A Nevada Corporation


Date: August 19, 2002                             /s/ Stephen F. Owens
                                                  By: Stephen F. Owens
                                                  Its: President,
                                                  Chief Financial Officer and
                                                  Director

Date: August 19, 2002                             /s/ Angela M. Raidl
                                                  By: Angela M. Raidl
                                                  Its: Vice President,
                                                  Secretary and Director