U.S. Securities and Exchange Commission
                              Washington D.C. 20549

                                   Form 10-KSB

         [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities 
             Exchange Act of 1934 

                   For the fiscal year ended December 31, 1998

         [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934

                             Commission File Number
                                    333-16031

                        EMPIRE COMMUNICATIONS CORPORATION
           (Name of small business issuer as specified in its charter)

                   Nevada                                 86-0793960
         (State or other jurisdiction of             (I.R.S. employer
          incorporation or organization)              identification No.)

              4001 West 104th Terrace, Overland Park, Kansas 66207
                    (Address of principal executive offices)

                                  913-469-1662
                (Registrant's telephone no., including area code)

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

    Securities registered pursuant to Section 12(g) of the Exchange Act: None


Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Exchange  Act during the  preceding 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
                               Yes __X__ No ______

Check  if no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of the Issuer's  knowledge,  in the definitive  proxy or information
statements  incorporated  by  reference  in Part III of this form  10-KSB or any
amendment to this Form 10-KSB. [X]

The Issuer's revenues for its most recent fiscal year:  $ 0

The number of shares  outstanding  of the Issuer's  common stock at December 31,
1998: 3,200,000

Transitional Small Business Disclosure Format: Yes _____ No X

                                                                               1

<PAGE>


                                     PART I
Item 1. Description of Business

         The Company was  incorporated in the State of Nevada on April 27, 1995,
under the name of Landmark  Leasing,  Corp. to engage in the  equipment  leasing
business. This business was not successful,  and the Company sought new business
opportunities for its shareholders.

         To pursue a new business  opportunity  in the economic  consulting  and
expert witness business,  the Company changed its name to Litigation  Economics,
Inc.  on  December  22,  1996,  the same  date on which it  acquired  all of the
outstanding  stock of G.E.C., Inc. ("G.E.C."),  an Idaho  corporation  formed to
engage in that  business.  (The  description  of the  Company's  business  while
pursuing  this  business  opportunity  was set out in its Annual  Report on Form
10-KSB for the year ended  December 31, 1997.) This  business  proved to be only
marginally  successful,  and in  connection  with the new  PaperDirect  business
opportunity described below, the Company decided to sell G.E.C.

         During the first quarter of 1998,  the Company  received the offer of a
new  business  opportunity  to acquire  PaperDirect,  Inc.  and  Current  Social
Expressions, businesses engaged in the wholesale distribution of specialty paper
and related products and greeting cards to the United States business community.
To accept this  offer,  the  Company  changed its name to Empire  Communications
Corporation  and sold a series  of new  preferred  stock  to an  investor  which
effected a change in  control of the  Company.  The  Company  engaged in several
related material corporate actions,  including a 2-for-1 forward stock split and
the sale of the G.E.C.  subsidiary to a shareholder of the Company in return for
the cancellation of certain shares and a small amount of cash. During the second
quarter of 1998,  the Company was unable to obtain the  assurances and financial
information  it needed  with  respect  to the  PaperDirect  businesses,  and the
parties to the PaperDirect  business opportunity agreed to rescind the Company's
involvement. The Company surrendered its PaperDirect acquisition contract rights
in return for the  rescission of the new preferred  stock and the related change
in control.  The 2-for-1 stock split stayed in place, and the Company  rescinded
its sale of G.E.C. (The PaperDirect transactions were described in detail in the
Company's  Current  Reports on Form 8-K dated March 27,  1998,  May 20, 1998 and
July 20, 1998; and in the Company's  Quarterly  Reports on Form 10-QSB dated May
14, 1998 and August 13, 1998.) These rescissions became effective July 14, 1998.

         In December,  1998, the Company sold G.E.C.  for  $16,911.22  cash, and
currently  has no  business  operations.  The  Company  is  actively  seeking  a
successful business  opportunity through technology  acquisition,  merger with a
going concern or otherwise.

         During its  approximately  four years of  operations,  the  Company has
generated no  significant  revenues and continues to be considered a development
stage  company.  The Company  raised funds at first from its founders,  and then
from a public offering in July,  1997. Since its  organization,  the Company has
attempted to develop three different business opportunities  (leasing,  economic
consulting  and  specialty  business  paper goods) but these efforts have so far
proven unsuccessful.

         Following the rescission of the PaperDirect  transactions and change in
control, the Company has moved its executive offices to Overland Park, Kansas in
space provided by the Company's new Chief  Executive  Officer and sole Director,
Norman Petersen, at no cost to the Company.

                                                                               2
<PAGE>

Item 2. Properties

         The  Company  has no real  property  assets nor does it have any leased
space.  It currently  operates  out of the offices of its  President in Overland
Park,  Kansas.  The  address  of the  Company  appears on the cover page of this
report.

Item 3. Legal Proceedings

         The Company is not a party to any material  pending  legal  proceedings
and, to the best of its knowledge,  no action by or against the Company has been
threatened.

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

         No  matters  were  submitted  to a vote of the  Company's  shareholders
during the fourth quarter of the fiscal year ending December 31, 1998.

Item 5. Market for Common Equity and Related Stockholder Matters

         (a) Market Information

         The Company's Common Stock has not been listed on any bulletin board or
exchange  and there is  currently  no public  trading  market for the  Company's
common stock.

         (b) Stockholders

         As of December 31, 1998, there were  approximately 60 record holders of
the Company's  Common Stock.  No other class of stock is outstanding.(1) at this
time.

         (c) Dividends

         The  Company  has  not  previously  paid  any  cash  dividends  on  its
outstanding  equity  securities and does not  anticipate or  contemplate  paying
dividends on its outstanding common stock in the foreseeable future.  Management
intends to utilize all  available  funds for the  development  of the  Company's
business.  The only legal  restrictions  that limit the Company's ability to pay
dividends are those  restrictions  imposed by Nevada corporate law. No dividends
or other  distributions  may be made which would render the Company insolvent or
reduce assets to less than the sum of its liabilities  plus the amount needed to
satisfy any outstanding liquidation preferences.


--------
1 The Company issued a class of convertible  preferred  stock in connection with
  the PaperDirect business opportunity  referenced above. In connection with the
  rescission of that business  opportunity and related  actions,  this series of
  convertible preferred stock was cancelled and rescinded.

                                                                               3
<PAGE>


                                     PART II

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         The following  discussion  and analysis  should be read in  conjunction
with the  Company's  financial  statements  and the notes  associated  with them
contained elsewhere in this report.

         Liquidity and Capital Resources

         As of December  31,  1998,  the  Company  had no cash or other  current
assets,  and was  not  engaged  in any  fund  raising  activities.  The  Company
presently has no commitment or  arrangements  for additional  financing from any
source. To pursue any new business opportunity,  the Company would need to raise
additional funds through the sale of equity,  or would need to use its equity to
acquire a business with cash on account.

         Year 2000 Issues

         The Company  uses  personal  computers  to maintain  its  records.  The
Company has not tested its personal computers for compliance with Year 2000 date
change  issues.  If the  Company's  records  are  lost as a result  of  computer
failures  associated with date changes over the next 18 months, it would cause a
significant adverse impact on the Company and its shareholders.

         The Company also obtains  goods and services,  including  basic utility
services. The companies who provide these services to the Company have their own
computer systems,  both data processing and machine  controllers,  and they also
face  problems  from date changes  over the next 18 months.  The Company has not
surveyed  its  suppliers  and is not  aware of the  level of  compliance  of its
suppliers' computer systems. The failure of the Company's suppliers of goods and
services to provide  such goods and  services to the Company as a result of Year
2000-related  computer problems would result in a material adverse impact on the
Company.

         Results of Operations.  Fiscal Year Ended December 31, 1998 Compared to
         Fiscal Year Ended December 31, 1997

         Operating  revenue  for fiscal  year 1998 was $0,  the same  results as
experienced  in  1997.  (Note  that  the  sale  of the  Company's  G.E.C.,  Inc.
subsidiary  in late 1998  required  a  restatement  of the  Company's  financial
statements  for 1997 and 1998.  During 1997 and 1998,  all of the Company's then
reported  revenues  came from  G.E.C.)  The  Company  has had no other  business
operations, and has no cash or other earning assets.

         Operating  expenses for fiscal year 1998 totaled  $22,492,  up from the
$19,959  level  experienced  in 1997.  The  higher  expenses  were  incurred  in
connection with the abortive  PaperDirect  transaction.  These expenses consumed
all of the cash held by the  Company as well as the  proceeds  of the  Company's
sale of G.E.C.  in late  1998.  The bulk of these  expenses  are non  recurring.
General and administrative  costs for fiscal year 1998 were $22,492 with $19,959
in 1997 (as restated for the sale of G.E.C.; see footnote 1)

Item 7. Financial Statements

         The Company's audited  financial  statements are attached to the end of
this report.

                                                                               4
<PAGE>

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

         None


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act

         (a) Directors and Executive Officers

         The following table sets forth the directors and executive  officers of
the Company,  their ages, and all offices and positions  with the Company.  Each
director is elected  for a period of one year and  thereafter  serves  until his
successor is duly elected by the stockholders and qualifies.  Officers and other
employees serve at the will of the Board of Directors.


         Name of Officer or Director  Age   Positions with Company and Biography

         Norman L. Petersen            58   President   and   Director   of  the
                                            Company. Mr. Petersen is currently a
                                            partner  in Owen &  Associates  IBG,
                                            LLC,  a  consulting  and  investment
                                            company. He is also chairman and CEO
                                            of a full service  mortgage  banking
                                            company    with    105     employees
                                            nationwide.    Mr.    Petersen   was
                                            president and CEO from  1988-1996 of
                                            Advanced Financial, Inc., the parent
                                            company of AFI Mortgage Corp., which
                                            is a public  company  trading on the
                                            American   Stock   Exchange.   Other
                                            professional    experience   include
                                            being on the Board of  Directors  of
                                            Red  Oak   Hereford   Farms,   Inc.,
                                            financial consulting and director of
                                            Miller Fed Lot,  a large  commercial
                                            feedlot for which he supervised  the
                                            credit    division    which   loaned
                                            $25,000,000 a month to borrowers who
                                            owned  cattle  in the lot,  director
                                            and  majority   shareholder  of  the
                                            holding  company  that owned  Platte
                                            Valley  Bank and  Trust  Company,  a
                                            commercial bank in central  Nebraska
                                            and    Vice-President   of   Lincoln
                                            Production Credit Association.

         (b)  Involvement in Certain Legal Proceedings

         None

         (c) Compliance with Section 16(a) of the Exchange Act

         The issuer is not subject to the provisions of Section 16(a).

Item 10. Executive Compensation

         The  Company  has  not  paid  compensation  to any of its  officers  or
directors.

                                                                               5
<PAGE>
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

---------------------------------------------------------------------------------------------------------------------
                                  Annual Compensation                        Long-Term Compensation
                                                             ------------------------------- ------------------------
                                                                         Awards                      Payouts
---------------------------------------------------------------------------------------------------------------------
Name and                      Salary    Bonus    Other        Restricted      Securities      Long-term   All Other
Principal Position                               Annual      Stock Awards     Underlying      Incentive   Compensation
                                                 Compensation                Options/SARs      Payout
---------------------------------------------------------------------------------------------------------------------
<S>                           <C>       <C>        <C>          <C>             <C>             <C>         <C>
Cornelius Hofman                0         0          0            0               0               0           0
President and Chief
Executive Officer
(1/1/98 -3/31/98)
---------------------------------------------------------------------------------------------------------------------
Louis A. Farris, Jr.            0         0          0            0               0               0           0
President and Chief
Executive Officer
(3/31/98 -5/22/98)
---------------------------------------------------------------------------------------------------------------------
Norman L. Petersen              0         0          0            0               0               0           0
President and Chief
Executive Officer
5/22 /98 - present
---------------------------------------------------------------------------------------------------------------------
</TABLE>


         Stock Option and Stock Appreciation Right Plans

         The Company  adopted its 1996 Stock Option Plan allowing the Company to
offer  its  key   employees,   officers,   directors,   consultants   and  sales
representatives,  an  opportunity  to  acquire  a  proprietary  interest  in the
Company.  The various types of incentive  awards which may by provided under the
Stock Option Plan will enable the Company to respond to changes in  compensation
practices,  tax laws,  accounting  regulations and the size and diversity of its
business.  The total number of shares  reserved and available  for  distribution
under the 1996 Plan is 800,000 (adjusted for the 1998  2-for-1stock  split.) The
1996 Plan is administered by the Board of Directors which determines the persons
to whom  awards  will be  granted,  the number of awards to be  granted  and the
specific  terms of each grant,  including  the vesting  thereof,  subject to the
provision of the 1996 Plan. In connection  with the stock options,  the exercise
price of each grant is to be determined by the Board of Directors at the time of
the grant and may not be less than 100% of the fair  market  value of the Common
Stock on the date of the grant or 110% of the fair  market  value of the  Common
Stock on the date of the grant for 10%  Stockholders.  The aggregate fair market
value of Stock  (determined  at the time of grant of the Option) with respect to
which Incentive Stock Options become exercisable by a Holder during any calendar
year shall not exceed $100,000. The Option holders will not be protected against
dilution if the Company  should issue  additional  shares of common stock in the
future.  Neither  the  Options,  nor the  shares  underlying  the  Options  have
preemptive  rights.  As of  December  31,  1998,  the Company has not issued any
Options pursuant to the Plan.

         The Company has no  employment  agreements,  and has not engaged in any
repricing of stock options.

                                                                               6
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain  information with respect to the
current  beneficial  ownership of the Company's  common stock as of December 31,
1998 of each person known to the Company to be the beneficial owner of more than
five  percent (5%) of said  securities,  each  director of the Company,  and all
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>


                Name and                     Title of                 Amount and Nature of               Percent
                 Address                    Securities                Beneficial Ownership              of Class

<S>                                         <C>                            <C>                          <C> 
         Norman L. Petersen                   Common                         193,000                       6.03
         4001 W. 104th Terrace
         Overland Park, KS 66207

         All officers and                     Common                         193,000                       6.03
         directors as a group
         (1 person)

         Cornelius A Hofman II                Common                         729,000                      22.78
         227 South Ninth Ave.
         Pocatello, ID 83201

         Stacey A. Hofman                     Common                         735,000                      22.96
         227 South Ninth Ave.
         Pocatello, ID 83201

         David N. Nemelka                     Common                     865,000*, **                     27.03
         897 S. Artistic Cr.
         Springville, UT 84663
</TABLE>

         *        Owned or controlled by David N. Nemelka or entities controlled
                  by David N. Nemelka.

         **       After  December  31, 1998,  Mr.  Nemelka  acquired  additional
                  shares of the Company's common stock in a private  transaction
                  not involving any of the other above named shareholders. As of
                  March 16,  1999,  Mr.  Nemelka  beneficially  owned  1,115,000
                  shares, with a concomitant increase in his relative percentage
                  ownership in the Company.

Item 12. Certain Relationships and Related Transactions

         The  Company has  entered  into  certain  transactions  with  officers,
directors or affiliates of the Company which include the following:

         -Between  December 22, 1996 and March 15, 1998, the Company used as its
principal  executive  office,  the  home  office  of  Cornelius  A.  Hofman  II,
President, (227 South Ninth Avenue, Pocatello, Idaho 83201) in Pocatello, Idaho.
The Company paid  approximately  $2,100 to improve Mr.  Hofman's  home office in
exchange for use of the office space until the Company's  business requires more
extensive administrative  facilities.  There was no formal written agreement for
the use of such facilities.

                                                                               7
<PAGE>

         In 1997,  the Company  subcontracted  some  consulting  work to General
Economic  Consulting,  Inc., a company controlled by Cornelius A. Hofman, then a
director of the Company.  As of December 31, 1997, General Economic  Consulting,
Inc. received $2,544 in fees from said referral of business.

         -The Company is currently  using office space provided by its President
and sole director,  Norman L. Petersen. Mr. Petersen is not charging the Company
for  this  office  usage,  although  Mr.  Petersen  reserves  the  right to seek
reimbursement  and  compensation  from the  Company  for this  usage  should the
Company become able to pay such amounts.


                                     PART IV

Item 13. Exhibits and Reports on Form 8-K

        Exhibits

        Exhibit      Title of Document                    Location
        Reference
        Number 

        3.01          Articles of Incorporation            Incorporated by 
                                                           Reference*

        3.02          By-Laws                              Incorporated by 
                                                           Reference*

        10.01         Agreement of Sale of G.E.C., Inc.    Filed Herewith

        23.01         Consent of Accountants               Filed Herewith

        27.01         Financial Data                       Filed Herewith

        99.01         1996 Stock Option Plan               Incorporated by 
                                                           Reference*

         * Incorporated by reference from the registrants registration statement
         on Form  SB-2,  as  amended  and filed  with the  Commission,  SEC file
         number 333-16031.

         Reports on Form 8-K

         The  Company  filed  current  reports  on Form 8-K  during  1998 on the
following  dates, all of which reports are available under the Company's name on
the Commission's website, www.sec.gov:

         March 27, 1998
         May 20, 1998
         July 20, 1998
         July 17, 1998 (amendment)


                                   SIGNATURES

         Pursuant to the  requirements  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.

                  EMPIRE COMMUNICATIONS CORPORATION              DATE:

                  By /s/ Norman L. Petersen                      March 16, 1999
                     ----------------------
                  Norman L. Petersen, Director and President

                                                                               8
<PAGE>



                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                                December 31, 1998

                                      F-1
<PAGE>




                                 C O N T E N T S



Independent Auditors' Report............................................ F-3

Balance Sheet........................................................... F-4

Statements of Operations................................................ F-5

Statements of Stockholders' Equity (Deficit)............................ F-6

Statements of Cash Flows................................................ F-7

Notes to the Financial Statements....................................... F-8

                                      F-2
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Empire Communications Corporation
(Formerly Litigation Economics, Inc.)
Salt Lake City, Utah

We  have  audited  the  accompanying  balance  sheet  of  Empire  Communications
Corporation (formerly Litigations Economics, Inc.) (a development stage company)
as of December 31, 1998 and the related statements of operations,  stockholders'
equity  (deficit) and cash flows for the years ended  December 31, 1998 and 1997
and from inception on April 27, 1995 through  December 31, 1998. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Empire   Communications
Corporation (formerly Litigation Economics,  Inc.) (a development stage company)
as of December 31, 1998 and the results of its operations and its cash flows for
the years ended  December 31, 1998 and 1997 and from inception on April 27, 1995
through  December 31, 1998 in  conformity  with  generally  accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 4 to the
financial  statements,  the  Company  is a  development  stage  company  with no
significant  operating results to date, which raises substantial doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 4. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.



Jones, Jensen & Company
Salt Lake City, Utah
January 15, 1999

                                      F-3
<PAGE>
<TABLE>
<CAPTION>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                                  Balance Sheet


                                     ASSETS

                                                                                               December 31, 1998

CURRENT ASSETS

<S>                                                                                            <C>                   
   Cash                                                                                        $               -     
                                                                                               -----------------
     Total Current Assets                                                                                      -     
                                                                                               -----------------
     TOTAL ASSETS                                                                              $               -     
                                                                                               =================


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                                                            $             506
                                                                                               -----------------

     Total Liabilities                                                                                       506
                                                                                               -----------------
STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock; authorized 5,000,000 shares at $0.001
    par value; no shares issued or outstanding                                                                 -
   Common stock; authorized 50,000,000 shares at $0.001
    par value; 3,200,000 shares issued and outstanding                                                     3,200
   Additional paid-in capital                                                                            102,800
   Deficit accumulated during the development stage                                                     (106,506)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                                   (506)
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $               -     
                                                                                               =================
</TABLE>


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

                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                            Statements of Operations

                                                                                                     From
                                                                                                  Inception on
                                                                                                    April 27,
                                                             For the Years Ended                  1995 Through
                                                                  December 31,                    December 31,
                                                             1998                1997                 1998      
                                                    ------------------    ----------------     -----------------

<S>                                                 <C>                  <C>                   <C>
REVENUE                                             $                     $                    $
                                                    ------------------    ----------------     -----------------
EXPENSES

   General                                                      22,492              19,959                47,576
                                                    ------------------    ----------------     -----------------

     Total Expenses                                             22,492              19,959                47,576
                                                    ------------------    ----------------     -----------------

LOSS FROM OPERATIONS                                           (22,492)           (19,959)               (47,576)
                                                    ------------------    ---------------      -----------------

DISCONTINUED OPERATIONS

   Loss on sale of subsidiary                                  (58,930)                                  (58,930)
                                                    ------------------    ---------------      -----------------

       Total Other Expense                                     (58,930)                                  (58,930)
                                                    ------------------    ---------------      -----------------

NET LOSS                                            $          (81,422)   $       (19,959)     $        (106,506)
                                                    ==================    ===============      =================

BASIC NET LOSS PER SHARE                            $            (0.03)   $         (0.01)
                                                    ==================    ===============

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                                          3,200,000          2,933,000
                                                    ==================    ===============
</TABLE>

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

                                      F-5
<PAGE>
<TABLE>
<CAPTION>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                  Statements of Stockholders' Equity (Deficit)

                                                                                                      Deficit
                                                                                                    Accumulated
                                                                                  Additional         During the
                                                    Common Stock                    Paid-in          Development
                                               Shares          Amount               Capital             Stage
                                            -----------       ---------           ----------         -----------  
<S>                                         <C>               <C>                 <C>                <C>
Balance, April 27, 1995                     $                 $                   $                  $

Common stock issued for
 cash at $0.001 per share                     2,000,000           2,000               (1,000)               -

Recapitalization of G.E.C., Inc.              1,000,000           1,000                4,000                -

Net loss for the period ended
 December 31, 1996                                                                                        (5,125)
                                            -----------       ---------           ----------         -----------  

Balance, December 31, 1996                    3,000,000           3,000                3,000              (5,125)

Common stock issued for
 cash at $1.00 per share                        200,000             200               99,800                -

Net loss for the year ended
 December 31, 1997                                                                                       (19,959)
                                            -----------       ---------           ----------         -----------  

Balance, December 31, 1997                    3,200,000           3,200              102,800             (25,084)

Net loss for the year ended
 December 31, 1998                                                                                       (81,422)
                                            -----------       ---------           ----------         -----------  

Balance, December 31, 1998                  $ 3,200,000       $   3,200           $  102,800         $  (106,506)
                                            ===========       =========           ==========         ===========
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-6
<PAGE>
<TABLE>
<CAPTION>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                            Statements of Cash Flows

                                                                                                             From
                                                                                                          Inception on
                                                                                                           April 27,
                                                                       For the Years Ended                1995 Through
                                                                           December 31,                   December 31,
                                                                    1998                1997                  1998    
                                                             ------------------    ----------------     -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>                   <C>                  <C>               
   Net loss                                                  $          (81,422)   $        (19,959)    $        (106,506)
   Adjustments to reconcile net loss to net 
    cash used by operating activities:
     Loss on sale of subsidiary                                          58,930                -                   58,930
     Expenses paid in conjunction with
      sale of subsidiary                                                 16,912                -                   16,912
     Increase (decrease) in accounts payable                                506              (2,372)                  506
                                                             ------------------    ----------------     -----------------

       Net Cash (Used) by Operating Activities                           (5,074)            (22,331)              (30,158)
                                                             ------------------    ----------------     -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Investment in subsidiary                                                                 (75,842)              (75,842)
                                                             ------------------    ----------------     -----------------

       Net Cash (Used) by Investing Activities                                              (75,842)              (75,842)
                                                             ------------------    ----------------     -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Cash acquired in recapitalization of subsidiary                        -                    -                    5,000
   Common stock issued for cash                                                             101,000               101,000
                                                             ------------------    ----------------     -----------------

       Net Cash Provided by Financing Activities                                            101,000               106,000
                                                             ------------------    ----------------     -----------------

NET INCREASE (DECREASE) IN CASH                                          (5,074)              2,287                  -
CASH AT BEGINNING OF PERIOD                                               5,074               2,247                 
                                                             ------------------    ----------------     -----------------

CASH AT END OF PERIOD                                        $                     $          5,074     $            -
                                                             ==================    ================     =================

Cash Paid for:

Interest                                                     $            -        $           -        $            -
Income taxes                                                 $            -        $           -        $            -
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-7
<PAGE>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              Organization and Operating History

              The Company was  incorporated  in the State of Nevada on April 27,
              1995, under the name of Landmark Leasing, Corp.

              The  Company   planned  on  operating  as  a  leasing  company  of
              residential property,  commercial property,  vehicles, and related
              activities.  The Company has  discontinued  pursuing  any of these
              activities and  accordingly  remains a development  stage company.
              The Company  changed  its name to  Litigation  Economics,  Inc. on
              December  22,  1996.  The  Company  changed  its  name  to  Empire
              Communications Corporation on March 23, 1998.

              On December 22, 1996, the Company  acquired all of the outstanding
              stock of G.E.C.,  Inc., (the  Subsidiary) for 1,000,000  shares of
              the  Company's  common  stock  valued at $.001 per share or $1,000
              which represented the capital  contributed to the subsidiary.  The
              acquisition of the  Subsidiary was recorded as a  recapitalization
              of the Subsidiary,  whereby the acquired company is treated as the
              surviving  entity for  accounting  purposes.  The  Subsidiary  was
              formed on July 31, 1996 in the State of Idaho.  The Subsidiary was
              engaged  in the field of  economic  advising  and  consulting  and
              commenced principal business operations during 1997.  Accordingly,
              the subsidiary was also considered a development stage company. On
              December 1, 1998, the Company sold all of the outstanding stock of
              the Subsidiary for $16,911.

              Summary of Significant Accounting Policies

              a. Accounting Method

              The Company's financial  statements are prepared using the accrual
              method of accounting. The Company has selected a December 31, year
              end.

              b. Basic Net Loss Per Share

              The  computation  of basic loss per share of common stock is based
              on the weighted  average number of shares  outstanding at the date
              of the consolidated financial statements.

                                       F-8
<PAGE>


                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              c.  Provision for Taxes

              At  December  31,  1998,   the  Company  has  net  operating  loss
              carryforwards of approximately $104,000 that may be offset against
              future  taxable  income  through  2013.  No tax  benefit  has been
              reported in the  consolidated  financial  statements,  because the
              Company  believes  there is a 50% or greater  chance the operating
              loss carryforwards will expire unused. Accordingly,  the potential
              tax benefits of the operating loss  carryforwards  are offset by a
              valuation allowance of the same amount.

              d.  Cash and Cash Equivalents

              For purposes of the financial statement presentation,  the Company
              considers all highly liquid  investments  with a maturity of three
              months or less to be cash equivalents.

              e.  Use of Estimates

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and  liabilities  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.

NOTE 2 -      COMMON STOCK OPTIONS

              In October of 1996, the Board of Directors  adopted the 1996 Stock
              Option Plan (the  "Plan"),  allowing  the Company to offer its key
              employees,    officers,   directors,    consultants,   and   sales
              representatives  an opportunity to acquire a proprietary  interest
              in the Company.  The total number of shares reserved and available
              for distribution under the Plan were 400,000 shares.  These shares
              will  underlie the Options  issued by the Company  pursuant to the
              Plan. The Option holders will not be protected against dilution if
              the Company should issue additional  shares of common stock in the
              future. Neither the Options, nor the shares underlying the Options
              have pre-emptive rights. The plan was amended on March 13, 1998 to
              increase the shares available under the plan to 800,000 shares. As
              of December 31, 1998, no  activity has  transpired  with regard to
              the Plan.

                                      F-9
<PAGE>

                        EMPIRE COMMUNICATIONS CORPORATION
                      (Formerly Litigation Economics, Inc.)
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998


NOTE 3 -      GOING CONCERN


              The Company's consolidated financial statements are prepared using
              generally  accepted  accounting  principles  applicable to a going
              concern  which   contemplates   the   realization  of  assets  and
              liquidation  of  liabilities  in the  normal  course of  business.
              However,  the Company does not have  significant  cash and has not
              had significant operations.  To date, the Company has been able to
              cover  operating  costs with  existing  financial  resources.  The
              Company is seeking a merger with an existing,  operating  Company.
              In the  interim,  officers of the Company  have  committed to make
              capital contributions or advances to the Company should additional
              funds be needed to pay operating expenses.

NOTE 4 -      STOCK TRANSACTIONS

              On March 13, 1998,  the Company  approved a 1-for-2 stock split in
              the form of a 100% stock dividend paid to  shareholders  of record
              on  March  1,  1998.   These   financial   statements   have  been
              retroactively restated to reflect the change.

NOTE 5 -      DISCONTINUED OPERATIONS

              On  December  31,  1998  the  Company  agreed  to sell  all of its
              ownership  of  G.E.C.,  Inc.  to a third party  for $16,911 in the
              form of the assumption of the debts of the Company.

                                      F-10