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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 ___March 31, 2004______________________________ |
| |
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from _________________ to _________________ |
| |
| Commission file number ___0-30118____________________________________ |
EMPYREAN COMMUNICATIONS INC.
(exact name of small business issuer as specified in its charter)
___NEVADA_____________________________________
(State or other jurisdiction of incorporation or organization) | _________88-0413417________________________
(IRS Employer Identification No.) |
2537 South Gessner, Suite 114,
Houston, TX 77063
(address of principal executive offices)
Issuers telephone number: (713) 260 7236
(Registrant's telephone number, including area code)
_________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer
filed all documents and reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12months(or for such shorter period that the registrant was required to file such reports)and
has been subject to such filing requirements for the past 90 days (X) Yes ( ) No
_As of March 31, 2004 there were 21,765,951* shares of common stock issued and outstanding
Note: * Does not include 1,150,000 shares "on hold" and awaiting return from third party
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I ' FINANCIAL INFORMATION
Item 1. Financial Statements.
Following are the un-audited financial statements for the period ended March 31, 2004:
EMPYREAN COMMUNICATIONS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
March 31, 2004
ASSETS
Current Assets
Cash $ 2,121
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current Liabilities
Accounts Payable $ 15,596
Notes payable to shareholders 55,453
-----------
Total Current Liabilities 71,049
-----------
Commitments and Contingencies
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par, 10,000,000 shares
authorized, 10,000,000 shares issued and outstanding 10,000
Common stock, $.001 par, 50,000,000 shares
authorized, 21,765,951 shares issued and outstanding 21,766
Paid in capital �� 5,343,789
Deficit accumulated during the development stage (5,444,483 )
-----------
Total Stockholders' Deficit ( 68,928 )
-----------
Total Liabilities & Stockholders' Deficit $ 2,121
===========
EMPYREAN COMMUNICATIONS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF EXPENSES
Three Months Ended March 31, 2004 and 2003 and the Period from
October 30, 2000 (Inception) Through March 31, 2004
Inception
Through
March 31,
2004 2003 2004
-------- ------- -----------
General and administrative $ 86,369 $ 5,890 $ 2,912,710
Impairment of investment 2,600,000
Gain on forgiveness of debt ( 68,227 )
-------- ------- -----------
Net loss $(86,369 ) $(5,890 ) $(5,444,483 )
======== ======= ===========
Basic and diluted loss per
common share $ (0.00 ) $ (0.00 )
Weighted average common
shares outstanding 18,524,193 3,737,489
EMPYREAN COMMUNICATIONS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2004 and 2003 and the Period from
October 30, 2000 (Inception) Through March 31, 2004
Inception
Through
March 31,
2004 2003 2004
--------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (86,369) $(5,890 ) $(5,444,483 )
Adjustments to reconcile net loss
to cash used in operating activities:
Stock issued for services 112,500 1,798,425
Stock issued for settlement 38,000
Fair value of stock issued in excess
of debt 500
Imputed interest 1,194 5,335
Impairment of investment 2,600,000
Gain on forgiveness of debt ( 68,227 )
Changes in:
Accounts payable ( 32,753 ) 5,458 98,818
--------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES ( 5,428 ) ( 432 ) ( 71,632 )
--------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable to
shareholders 7,270 ( 2,439 ) 78,122
Payments on notes payable to
Shareholders ( 404 ) - ( 15,169 )
Stock issued for cash - 4,000 10,800
--------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,866 1,561 73,753
--------- ----------- -----------
NET CHANGE (INCREASE/DECREASE) IN CASH 1,438 1,129 1,438
Cash balance, beginning 683 - -
--------- ----------- -----------
Cash balance, ending $ 2,121 $ 1,129 $ 2,121
========= =========== ===========
NON-CASH DISCLOSURES:
Forgiveness of debt by a related party $ - $ - $ 29,578
Stock issued for accounts payable - - 965,599
Stock issued for notes payable - - 7,500
EMPYREAN COMMUNICATIONS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Empyrean Communications, Inc. ("Empyrean") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in Empyrean's latest annual report filed with the SEC on Form 10KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal year 2003, as reported in the 10KSB, have been omitted.
NOTE 2 - Equity
In Ferbuary , 2004, Empyrean issued 5,500,000 shares of common stock for services valued at $112,500. 5,000,000 of the shares with value of $100,000 were issued to two Empyrean officers.
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 acquisition 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 it's business plans
The company's main business focus is to pursue all available avenues in order to obtain the funding required for its wholly owned subsidiary, Basalt Fiber Company, to commence the manufacture and sales of continuous basalt fiber and related products.
In brief, Basalt fiber is the newest fiber application technology available to 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 are far superior than fiber glass, it will command premium prices for all its products. The many exciting 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.
Principal Product
Liquidity
During the next 12 months, the company will need significant working capital to fund its business development efforts and to complete the acquisition of Basalt Specialty Products, Inc.. The Company continues to actively pursue financing from all available sources both in the US and overseas.
Item 3. Controls and Procedures
As of March 31, 2004, the Company carried out an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined by Rule 13a-14(c) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company's chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company's disclosure controls and procedures were effective.
The Company also maintains a system of internal accounting controls that is designed to provide assurance that assets are safeguarded and that transactions are executed in accordance with management's authorization and properly recorded. This system is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel and an internal audit program to monitor its effectiveness. During the nine-month period ended March 31, 2003, there were no significant changes to this system of internal controls or in other factors that could significantly affect those controls.
PART II - OTHER INFORMATION
Item 5. Other Information
Board Meetings:
The Board of Directors, at a Special meeting held in Houston, Texas on February 12, 2004, approved the filing of a form S-8 registration statement for common shares to be issued to pay for professional fees and as compensation for consultants serving the Company.
The following shares were issue:
Mr. James B. Parsons 500,000 shares for legal fees of $10,000
Mr. Robert L. Lee 2,500,000 shares for consulting fees of $50,000
Mr. Anthony Fanale 2,500,000 share for consulting fees of $50,000
Item 6. Exhibits and Reports on Form 8-K.
Exhibit No. Document Location
3(i) Articles of Incorporation Previously Filed
3(ii) Bylaws Previously filed
________________________________________________________________________
Reports on Form 8-K
On March 3, 2004, the Company filed a report on Form 8-K, reporting a change in accountants under Item 4. The Company amended such filing on March 19, 2004.
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: May 21, 2004
Robert L. Lee, President and Director
/s/ Anthony Fanale Date: May 21, 2004
Anthony Fanale, Director
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Robert L. Lee, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Empyrean Communications, Inc. for the period ended March 31, 2003;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying offering officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely effect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Dated: May 21, 2004
/s/ Robert L. Lee
By: Robert L. Lee
President (or equivalent)
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of Empyrean Communications, Inc.., a Nevada corporation (the "Company"), on Form 10-QSB for the quarter ending March 31, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Robert L. Lee, President of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Robert L. Lee
Robert L. Lee, President
Dated: May 21, 2004
