---

U.S. SECURITIES AND
EXCHANGE COMMISSION

> Washington, D.C.
>   20549
>   
>   FORM 10-KSB
>   
>   ANNUAL REPORT
>   PURSUANT TO SECTION 13 OR 15(D)
>   OF THE SECURITIES
>   EXCHANGE ACT OF1934
>   
>   FOR THE FISCAL YEAR
>   ENDED DECEMBER 31, 2004
>   
>   EMPYREAN HOLDINGS,
>   INC.
>   ----------------------------
>   (Name of Small
>   Business Issuer in its charter)
>   Nevada
>       000-30118
>       88-0413417State or other
>       jurisdiction of incorporation
>       Commission File
>       Number
>       IRS
>       Identification No.
>   2537 South Gessner,
>   Suite 114, Houston Texas 77063
>   -------------------------------------------
>   Address of principal
>   executive offices) (Zip Code)
>   Issuer's telephone
>   number: (713) 260-7236
>   -----------------------------







Securities to be registered pursuant to Section 12(b) of the Act:

None

Securities to be registered pursuant to Section 12(g) of the Act:

Title of Class: Common Stock

Title of Class: Preferred

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in 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]

Revenues for the fiscal year ended December 31, 2004 were NIL

The Aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity as of March 15, 2005: $524,495

Number of shares of Common Stock, $0.001 par value per share, of the
registrant outstanding as of December 31, 2004: * 48,765,951

Note:

* 1,150,000 shares "on hold" and awaiting return by a third party not
included.



Number of shares of Preferred Stock of the registrant outstanding as of
December 31, 2004: 10,000,000

DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated herein by reference.

Transitional Small Business Issuer Format Yes _____ No X

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this annual report on Form 10-KSB contain or may
contain forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to consummate a merger or
business combination, economic, political and market conditions and
fluctuations, government and industry regulation, interest rate risk, U.S. and
global competition, and other factors. Most of these factors are difficult to
predict accurately and are generally beyond our control. You should consider the
areas of risk described in connection with any forward-looking statements that
may be made herein. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report.
Readers should carefully review this annual report in its entirety, including
but not limited to our financial statements and the notes thereto. Except for
our ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. For any forward-looking statements contained in any
document, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

---





PART I.

ITEM 1. DESCRIPTION OF BUSINESS

(a) Business Development.

Empyrean Holdings, Inc., a Nevada corporation ("Company"), was originally
organized on April 30, 1998 as Fuji International, Inc.; the name was changed on
December 28, 1998 to Direction Technologies, Inc. In March of 2001, Direction
Technologies, Inc., merged with Empyrean Communications, Inc., and the name was
changed to Empyrean Communications, Inc.

Following approval obtained at the Special shareholders' meeting held on
January 5, 2005, the company's name was changed to Empyrean Holdings, Inc.
effective January 25, 2005. The new name was adopted to more accurately reflect
the company's revised business plan and future direction.

The business office of the Company is located at 2537 South Gessner, Suite
114, Houston Texas 77063. Currently, the Company has no employees. The Company
anticipates venturing into other businesses with the intent of being in a better
position to improve its anticipated income position. Management feels that such
diversification may be a hedge against the continuing concerns of raising
capital to fund its operations and diversify its holdings. Hopefully, this will
produce a direct and tangible benefit to the Company in the future.

(b) Business of Issuer.



Presently, Empyrean Holdings, Inc. has no ongoing business
operations. In line with its revised business plan, however, the company signed
a letter of intent to acquire Tradewinds International, Corp. (Tradewinds), a
Nevada corporation, active in the real estate consulting business in several
states. Tradewinds has a close working relationship with Platinum Properties,
Inc., an established real estate brokerage firm located in Orlando, FL Baring
any unforeseen circumstances, this acquisition, to be accomplished through a
stock swap, will be completed in the near future.



Empyrean Holdings, Inc. also announced on February 15, 2005
that a decision had been taken to commence evaluation and procedures to raise
$40 million to finance the real estate activities being undertaken by Tradewinds
and also to prepare for business diversification. Financing will be obtained
through conventional bank loans, mortgage lenders and private placements in
overseas markets.





Controls and Procedures



Our management has conducted an evaluation of the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-14(c) promulgated under the Securities and Exchange Act of 1934, as amended)
as of a date (the "Evaluation Date") prior to the filing date of this report.
Based upon that evaluation, our management has concluded that our disclosure
controls and procedures are effective for timely gathering, analysing and
disclosing the information we are required to disclose in our reports filed
under the Securities Exchange Act of 1934, as amended. There have been no
significant changes made in our internal controls or in other factors that could
significantly affect our internal controls subsequent to the Evaluation Date.



ITEM 2. PROPERTIES



Empyrean Holdings, Inc. does not own any real property. The
current verbal lease agreement is for a 140 square feet office located at 2537
South Gessner, Suite 114, Houston Texas, 77063. The terms of the lease is month
to month and rental payment is not currently required.



ITEM 3. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



The Special Stockholders meeting was held on January 5, 2005
and all the corporate matters tabled were approved by adequate majorities and
adopted. To summarize, the following have been implemented by Management, as
mentioned in appropriate sections of this report.



1. The name of the corporation has been changed to Empyrean
Holdings, Inc.



2. The authorized common shares of the corporation have been
increased to 1,000,000,000 with a par value of $0.001.The authorized preferred
shares of the corporation has been increased to 200,000,000 shares with a par
value of $0.001



3. The Board of Directors was given discretionary authority
in the future to file an election under Section 54 the Investment Company Act of
1940 to be treated as a Business Development Company.



4. Malone and Bailey have been informed to continue as the
company's independent auditors for 2005. and



5. Robert L. Lee has been informed that he was elected a
member of the Board of Directors to serve till the next annual meeting.

---



PART II.

ITEM 5. MARKET FOR REGISTRANT'S
COMMON EQUITY AND RELATED SHAREHOLDERS MATTERS.

On March 3, 2000 the Company was cleared by the NASD for trading on the OTC
Bulletin Board. The symbol under the former name, Empyrean Communications, Inc,
was EPYR. As required by the name change to Empyrean Holdings Inc. made on
January 25, 2005, the company's trading symbol was changed to EPYH on the same
date.

At the present time, there are no assets available for the payment of
dividends. The Company does not anticipate paying any dividends in the next
twelve months.

The Articles of Incorporation currently authorize the issuance of
1,000,000,000 shares of common stock, with a par value of $0.001. The holders of
the Shares: (a) have equal ratable rights to dividends from funds legally
available therefore, when, as, and if declared by the Board of Directors of the
Company; (b) are entitled to share ratably in all of the assets of the Company
available for distribution upon winding up of the affairs of the Company; (c) do
not have preemptive subscription or conversion rights and there are no
redemption or sinking fund applicable thereto; and (d) are entitled to one
non-cumulative vote per share on all matters on which shareholders may vote at
all meetings of shareholders. These securities do not have any of the following
rights: (a) cumulative or special voting rights; (b) preemptive rights to
purchase in new issues of Shares; (c) preference as to dividends or interest;
(d) preference upon liquidation; or (e) any other special rights or preferences.
In addition, the Shares are not convertible into any other security. There are
no restrictions on dividends under any loan other financing arrangements or
otherwise. See a copy of the Articles of Incorporation, and an amendment
thereto, and Bylaws of the Company, attached as Exhibit 3.1, Exhibit 3.2, and
Exhibit 3.3, respectively, to this Form 10-SB/A. As of December 31, 2004, the
Company had 48,765,951(not inclusive of 1,150,000 shares 'on hold' and awaiting
return by a third party) of common stock outstanding.

Non-Cumulative Voting.

The holders of Shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining
Shares will not be able to elect any of the Company's directors.

Share Purchase Warrants

At December 31, 2004, no share purchase warrants were outstanding.

Share Purchase Option

At December 31, 2004, 3,250 share purchase options were outstanding. Each
option entitles the holder to purchase one additional share of the company at
$300 per share until April 17, 2010.

Dividends.

The Company does not currently intend to pay cash dividends. The Company's
proposed dividend policy is to make distributions of its revenues to its
stockholders when the Company's Board of Directors deems such distributions
appropriate. Because the Company does not intend to make cash distributions,
potential shareholders would need to sell their shares to realize a return on
their investment. There can be no assurances of the projected values of the
neither shares, nor can there be any guarantees of the success of the Company. A
distribution of revenues will be made only when, in the judgment of the
Company's Board of Directors, it is in the best interest of the Company's
stockholders to do so. The Board of Directors will review, among other things,
the investment quality and marketability of the securities considered for
distribution; the impact of a distribution of securities on its customers, joint
venture associates, management contracts, other investors, financial
institutions, and the company's internal management, plus the tax consequences
and the market effects of an initial or broader distribution of such securities.

Transfer Agent.

The Company continues to retain the services of Pacific Stock Transfer
Company, 500 E. Warm Springs Road, Suite 240, Las Vegas, NV 89119, to act as
transfer agent and registrar.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

The corporation plans to acquire Tradewinds through a stock swap to make a
start in the real estate business, initially in Florida. Consideration is also
being given to diversify into other businesses but progress will depend solely
on the success of obtaining the required financing and the backing of
appropriate investors. The placement of the company's shares through an SB2filing is also being reviewed.

The average high and low prices of the company's stock by quarters are given
below:



|     | 1st quarter | 2nd. Quarter | 3rd. quarter | 4th. Quarter
|---- | ----------- | ------------ | ------------ | ------------
|     |             |              |              |             
|High | 0.026       | 0.015        | 0.014        | 0.0039      
|     |             |              |              |             
|Low  | 0.025       | 0.014        | 0.004        | 0.0031      



ITEM 7. FINANCIAL STATEMENTS

Included herewith are the following financial statements:



---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors

Empyrean Holdings,
Inc.

(formerly Empyrean
Communications, Inc.)

(A Development
Stage Company)

Houston, Texas

We have audited the accompanying consolidated balance sheet of Empyrean
Holdings, Inc. as of December 31, 2004, and the related consolidated statements
of expenses, stockholders' deficit, and cash flows for the two years then ended
and the period from October 30, 2000 (Inception) through December 31, 2004.
These consolidated financial statements are the responsibility of Empyrean's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements for the
period October 30, 2000 (Inception) through December 31, 2002, were audited by
other auditors whose reports expressed unqualified opinions on those statements.
The consolidated financial statements for the period October 30, 2000
(Inception) through December 31, 2002, include total revenues and net loss of $0
and $4,762,824, respectively. Our opinion on the consolidated statements of
expenses, stockholders' deficit and cash flows for the period October 30, 2000
(Inception) through December 31, 2002, insofar as it relates to amounts for
prior periods through December 31, 2002, is based solely on the report of other
auditors.

We conducted our audits in accordance with standards of the Public Accounting
Oversight Board (United States). 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Empyrean
Communications, Inc., as of December 31, 2004, and the results of its operations
and its cash flows for the periods described in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that Empyrean will continue as a going concern. As discussed in Note 2
to the consolidated financial statements, Empyrean has suffered recurring losses
from operations and has a net capital deficiency, which raises substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters also are described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



MALONE & BAILEY, PC

www.malone-bailey.com

Houston, Texas



January 20, 2005



---



EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

CONSOLIDATED BALANCE
SHEET

December 31, 2004









|ASSETS                                    |                                                          |             
|----------------------------------------- | -------------------------------------------------------- | ------------
|                                          |                                                          |             
|Current Assets                            |                                                          |             
|                                          | Cash                                                     | $           
|                                          |                                                          | ============
|                                          |                                                          |             
|LIABILITIES AND STOCKHOLDERS'
    DEFICIT |                                                          |             
|                                          |                                                          |             
|LIABILITIES                               |                                                          |             
|Current Liabilities                       |                                                          |             
|                                          | Accounts payable                                         | $           
|                                          | Notes payable to shareholders                            |             
|                                          |                                                          | ------------
|Total Current
    Liabilities             |                                                          | 96,068      
|                                          |                                                          | ------------
|Commitments
    and Contingencies         |                                                          | -           
|                                          |                                                          |             
|STOCKHOLDERS'
    DEFICIT                 |                                                          |             
|                                          |                                                          |             
|                                          | Preferred stock, $.001
    par, 10,000,000 shares        |             
|                                          | authorized,
    10,000,000 shares issued and outstanding |             
|                                          | Common stock, $.001 par,
    50,000,000 shares           |             
|                                          | authorized,
    48,765,951 shares issued and outstanding |             
|                                          | Paid in capital                                          |             
|                                          | Deficit accumulated during
    the development stage     |             
|                                          |                                                          | ------------
|                                          | Total
    Stockholders' Deficit                          |             
|                                          |                                                          | ------------
|                                          | Total Liabilities & Stockholders' Deficit                | $           
|                                          |                                                          | ============









See accompanying
summary of accounting policies

and notes to financial
statements.



---





EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

CONSOLIDATED
STATEMENTS OF EXPENSES

Years Ended December
31, 2004 and 2003 and the Period from

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









|                               |               | 2004              |                | 2003               |                | Inception
    Through
    2004
|------------------------------ | ------------- | ----------------- | -------------- | ------------------ | -------------- | ------------------------------
|                               |               | ---------         |                | -----------        |                | -----------                   
|General and
    administrative | $     343,008 |                   | $      854,123 |                    | $    3,198,133
|Interest expense               | 5,370         |                   | -              |                    | 5,370         
|Impairment of investment       | -             |                   | -              |                    | 2,600,000     
|Gain on forgiveness of debt    | -             |                   | -              |                    | (96,856 )     
|                               |               | ---------         |                | -----------        |                | -----------                   
|Net loss                       |               | $   (348,378)     |                | $    (854,123)     |                | $(5,706,647)                  
|                               |               | =========         |                | ===========        |                | ===========                   
|                               |               |                   |                |                    |                |                               
|Basic and diluted loss per     |               |                   |                |                    |               
|                               | common share  | $      
    (.01) |                | $       
    (.09) |                |                               
|                               |               |                   |                |                    |                |                               
|Weighted average common        |               |                   |                |                    |               
|                               | outstanding   | 29,463,211        |                | 9,349,558          |                |                               































See accompanying
summary of accounting policies

and notes to financial
statements.





---





EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

CONSOLIDATED
STATEMENTS OF CASH FLOWS

Years Ended December
31, 2004 and 2003 and the Period from

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















|                                          |                                        |                                       |           |                |            |              | Inception  
|----------------------------------------- | -------------------------------------- | ------------------------------------- | --------- | -------------- | ---------- | ------------ | -----------
|                                          |                                        |                                       |           |                |            |              | Through    
|                                          |                                        |                                       | 2004      |                | 2003       |              | 2004       
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|CASH FLOWS FROM OPERATING ACTIVITIES      |                                        |                                       |           |                |           
|                                          | Net loss                               | $(348,378)                            |           | $(854,123)     |            | $(5,706,647)
|                                          | Adjustments to reconcile net loss      |                                       |           |                |            |             
|                                          |                                        | to cash used in operating activities: |           |                |            |              |            
|                                          | Stock issued for services              | 346,100                               |           | 540,000        |            | 2,032,025   
|                                          | Stock issued for settlement            | -                                     |           | 38,000         |            | 38,000      
|                                          | Fair value of stock issued in excess   |                                       |           |                |            |             
|                                          |                                        | of debt                               | -         |                | 500        |              | 500        
|                                          | Imputed interest                       | 5,370                                 |           | 4,295          |            | 9,665       
|                                          | Impairment of investment               | -                                     |           | -              |            | 2,600,000   
|                                          | Gain on forgiveness of debt            | -                                     |           | -              |            | (96,856)    
|                                          | Changes in:                            |                                       |           |                |            |             
|                                          |                                        | Accounts payable                      | (37,933 ) |                | 5,614      |              | 1,022,268  
|                                          |                                        | Prepaid Expenses                      | -         |                | 258,678    |              | -          
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|NET CASH USED IN OPERATING ACTIVITIES     | (34,841 )                              |                                       | (7,036 )  |                | (101,045 )
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|CASH FLOWS FROM FINANCING ACTIVITIES      |                                        |                                       |           |                |           
|                                          | Proceeds from notes payable to         |                                       |           |                |            |             
|                                          |                                        | shareholders                          | 37,468    |                | 12,684     |              | 108,320    
|                                          | Payments on notes payable to           |                                       |           |                |            |             
|                                          |                                        | Shareholders                          | (404 )    |                | (14,765 )  |              | (15,169 )  
|                                          | Stock issued for cash                  | -                                     |           | 9,800          |            | 10,800      
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|NET CASH PROVIDED BY FINANCING ACTIVITIES | 37,064                                 |                                       | 7,719     |                | 103,951   
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|NET CHANGE IN CASH                        | 2,223                                  |                                       | 683       |                | 2,906     
|                                          | Cash balance, beginning                | 683                                   |           | -              |            | -           
|                                          |                                        |                                       | --------- |                | ---------- |              | -----------
|                                          | Cash balance, ending                   | $ 2,906                               |           | $ 683          |            | $ 2,906     
|                                          |                                        |                                       | ========= |                | ========== |              | ===========
|NON-CASH DISCLOSURES:                     |                                        |                                       |           |                |           
|                                          | Forgiveness of debt by a related party | $       -                             |           | $       
    - |            | $    29,578 
|                                          | Stock issued for accounts payable      | -                                     |           | -              |            | 885,417     
|                                          | Stock issued for notes payable         | -                                     |           | 7,500          |            | 7,500       





See accompanying
summary of accounting policies

and notes to financial
statements.



---



EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS' DEFICIT

Period from October
30, 2000 (Inception)

Through December 31,
2004





|                                  | Preferred                     |            | Common       
|--------------------------------- | ----------------------------- | ---------- | -------------
|                                  | Shares                        |            | Amount       
|                                  | ----------                    |            | -------------
|Stock issued for:                 |                               |            |              
|                                  | - cash                        | -          |              
|                                  | - reverse
    acquisition     | -          |              
|Net loss                          |                               |            |              
|                                  |                               | ---------- |              
|Balances, December 31, 2000       | -                             |            | -            
|                                  |                               |            |              
|Forgiveness of debt by            |                               |            |              
|                                  | related party                 | -          |              
|Net loss                          | -                             |            | -            
|                                  |                               | ---------- |              
|Balances, December 31, 2001       | -                             |            | -            
|                                  |                               |            |              
|Stock issued for:                 |                               |            |              
|                                  | - services                    | -          |              
|                                  | - prepaid
    expense         | -          |              
|                                  | - accounts
    payable        | -          |              
|                                  | - acquisition
    of Belfiber | 10,000,000 |              
|                                  | - acquisition
    of Basalt   |            |              
|Net loss                          | -                             |            | -            
|                                  |                               | ---------- |              
|Balances, December 31, 2002       | 10,000,000                    |            | 10,000       
|                                  |                               |            |              
|Stock issued for:                 |                               |            |              
|                                  | - cash                        | -          |              
|                                  | - note
    payable            | -          |              
|                                  | - services                    | -          |              
|                                  | - settlements                 | -          |              
|Stock returned by majority        |                               |            |              
|                                  | shares for
    issuance       |            |              
|                                  | in
    settlements            | -          |              
|Imputed interest on notes         |                               |            |              
|                                  | payable to
    shareholders   | -          |              
|Net loss                          | -                             |            | -            
|                                  |                               | ---------- |              
|Balances, December 31, 2003       | 10,000,000                    |            |              
|                                  |                               |            |              
|                                  |                               |            |              
|Stock issued for services         | -                             |            | -            
|Imputed interest on notes payable |                               |            |              
|to shareholders                   | -                             |            | -            
|Net loss                          | -                             |            | -            
|                                  | ----------                    |            | -------------
|Balances, December 31, 2004       | 10,000,000                    |            | $            
|                                  | ==========                    |            | =============









See accompanying
summary of accounting policies

and notes to financial
statements.



---





EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS' DEFICIT

Period from October
30, 2000 (Inception)

Through December 31,
2004



|                                     |                               | Paid in Capital |               | Deficit Accumulated During The Development Stage |               | Totals       
|------------------------------------ | ----------------------------- | --------------- | ------------- | ------------------------------------------------ | ------------- | -------------
|                                     |                               | ------------    |               | -------------                                    |               | -------------
|Stock issued for:                    |                               |                 |               |                                                  |              
|                                     | - cash                        | $               | 963           |                                                  | $             | -            
|                                     | - reverse
    acquisition     | (26)            |               | -                                                |               | -            
|Net loss                             |                               |                 | (69,008)      |                                                  | (69,008)     
|                                     |                               | ------------    |               | -------------                                    |               | -------------
|Balances, December 31, 2000          | 937                           |                 | (69,008)      |                                                  | (68,008)     
|                                     |                               |                 |               |                                                  |              
|Forgiveness of debt by related party | 29,578                        |                 |               |                                                  | 29,578       
|Net loss                             |                               |                 | (934,533)     |                                                  | (934,533)    
|                                     |                               | ------------    |               | -------------                                    |               | -------------
|Balances, December 31, 2001          | 30,515                        |                 | (1,003,541)   |                                                  | (972,963)    
|                                     |                               |                 |               |                                                  |               |              
|Stock issued for:                    |                               |                 |               |                                                  |              
|                                     | - services                    | 806,287         |               |                                                  |               | 807,066      
|                                     | - prepaid
    expense         | 258,428         |               |                                                  |               | 258,678      
|                                     | - accounts
    payable        | 964,665         |               |                                                  |               | 965,599      
|                                     | - acquisition
    of Belfiber | 1,290,000       |               |                                                  |               | 1,300,000    
|                                     | - acquisition
    of Basalt   | 1,299,500       |               |                                                  |               | 1,300,000    
|Net loss                             |                               |                 | (3,500,605)   |                                                  | (3,500,605)  
|                                     |                               | ------------    |               | -------------                                    |               | -------------
|Balances, December 31, 2002          | 4,649,395                     |                 | (4,504,146)   |                                                  | 157,775      
|                                     |                               |                 |               |                                                  |               |              
|Stock issued for:                    |                               |                 |               |                                                  |              
|                                     | - cash                        | 9,260           |               |                                                  |               | 9,800        
|                                     | - note
    payable            | 7,600           |               |                                                  |               | 8,000        
|                                     | - services                    | 527,800         |               |                                                  |               | 540,000      
|                                     | - settlements                 | 37,200          |               |                                                  |               | 38,000       
|                                     |                               |                 |               |                                                  |               |              
|Stock returned by majority           |                               |                 |               |                                                  |              
|                                     | shareholder
    for issuance  |                 |               |                                                  |               |              
|                                     | in
    settlements            | 200             |               |                                                  |               | -            
|Imputed interest on notes payable    |                               |                 |               |                                                  |              
|                                     | to
    shareholders           | 4,294           |               |                                                  |               | 4,294        
|Net loss                             |                               |                 | (854,123)     |                                                  | (854,123)    
|                                     |                               | ------------    |               | -------------                                    |               | -------------
|Balances, December 31, 2003          | 5,235,749                     |                 | (5,358,269)   |                                                  | (96,254)     
|                                     |                               |                 |               |                                                  |              
|Stock issued for services            | 313,600                       |                 |               |                                                  | 346,100      
|Imputed interest on notes payable    |                               |                 |               |                                                  |              
|to shareholders                      | 5,370                         |                 |               |                                                  | 5,370        
|Net loss                             |                               |                 | (348,378)     |                                                  | (348,378)    
|                                     | ------------                  |                 | ------------- |                                                  | -------------
|Balances, December 31, 2004          | $                             | 5,554,719       |               | $                                                | (5,706,647)   |              
|                                     | ============                  |                 | ============= |                                                  | =============







See accompanying
summary of accounting policies

and notes to financial
statements.



---





EMPYREAN HOLDINGS,
INC.

(formerly Empyrean
Communications, Inc.)

(A Development Stage
Company)

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business. Fuji International, Inc. ("Fuji") was incorporated in
Nevada on April 30, 1998 and on December 28, 1998, Fuji changed its name to
Direction Technologies, Inc. ("Direction").

On February 23, 2001, Direction acquired all of the outstanding common shares
of Empyrean Communications, Inc. ("Empyrean") for 37,500 common shares of common
stock. As a result of this transaction, the shareholders of Empyrean acquired
control of Direction. The acquisition was accounted for as a reverse
acquisition. On April 9, 2001, Direction changed its name to Empyrean
Communications, Inc. On January 12, 2005, the name was changed from Empyrean
Communications, Inc. to Empyrean Holdings, Inc. ("Empyrean").

Basis of presentation. The consolidated financial statements include the
accounts of Empyrean and its wholly-owned subsidiaries, Belfiber Company ("Belfiber")
and Basalt Fiber Company ("Basalt"), both Virginia companies. Significant
inter-company accounts and transactions have been eliminated.

Certain amounts in financial statements of prior years have been reclassified
to conform to the presentation of the current year for comparative purposes.
Those reclassifications did not affect net loss for the periods presented.

Use of Estimates. In preparing financial statements, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities in the balance sheet and revenue and expenses in the statement of
expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents. For purposes of the statement of cash flows,
Empyrean considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. There were no cash
equivalents as of December 31, 2004.

Empyrean follows Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, by reviewing
such assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Impairment loss
recognized is the excess of the carrying amount over the fair value of the
asset. Two investments were impaired in 2002 resulting in $2,600,000 of
impairment expense.

Revenue Recognition. Empyrean has had no revenues since inception.

Income taxes. Empyrean recognizes deferred tax assets and liabilities based
on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. Empyrean provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.

Empyrean accounts for stock options issued to employees under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. Under this method, no compensation
expense is recognized for stock options granted when the number of underlying
shares is known and exercise price of the option is greater than or equal to the
fair market value of the stock on the date of grant. Fair value is computed and
expensed for options and warrants issued to non-employees as compensation. See
note 9 for more detail.

The basic net loss per common share is computed by dividing the net loss by
the weighted average number of common shares outstanding. Diluted net loss per
common share is computed by dividing the net loss adjusted on an "as if
converted" basis, by the weighted average number of common shares outstanding
plus potential dilutive securities. For the years ended December 31, 2004 and
2003, potential dilutive securities had an anti-dilutive effect and were not
included in the calculation of diluted net loss per common share.

Recently issued accounting pronouncements. Empyrean does not expect the
adoption of recently issued accounting pronouncements to have a significant
impact on their results of operations, financial position or cash flow.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Empyrean has incurred
recurring net losses of $348,378 and $854,123 in 2004 and 2003, respectively, an
accumulated deficit of $5,706,647 and a working capital deficit of $93,162 as of
December 31, 2004. These conditions create an uncertainty as to Empyrean's
ability to continue as a going concern. Management is trying to raise additional
capital through sales of common stock as well as seeking financing from third
parties. The financial statements do not include any adjustments that might be
necessary if Empyrean is unable to continue as a going concern.

NOTE 3 - NOTES PAYABLE TO SHAREHOLDERS

The majority shareholder advances money to Empyrean from time to time on an
as needed basis. The advances bear no interest, are not collateralized and are
due on demand. Interest of 8 percent is being imputed.

NOTE 4 - NOTE PAYABLE

In July 2003, a third party loaned Empyrean $7,500. The note carried no
interest and was due 60 days after issuance. In 2003, Empyrean issued 400,000
shares of common stock valued at $8,000 for payment of the $7,500 note payable.
The excess of fair value over carrying value totaling $500 has been expensed.

NOTE 5 - INCOME TAXES

> Deferred tax
>       assets                               
>       $ 49,000
>       Less: valuation
>       allowance                          
>       (49,000 )
>       --------
>       Net deferred
>       taxes                                
>       $      0
>       ========

Empyrean has net operating loss carryforwards of
approximately $143,000 at December 31, 2004, which expire between 2020 and 2024.



NOTE 6 - COMMITMENTS AND CONTINGENCIES

Empyrean's principal office is in the office of Empyrean's president pursuant
to a verbal agreement on a rent-free month-to-month basis.

Unasserted claims have been made against Empyrean for expenses incurred in
respect to the operations of Empyrean and expenses related to breach of
contract. While the results of these claims cannot be predicted with certainty,
management of Empyrean believes the final outcome of these claims will not have
an adverse material effect on Empyrean's financial position or results of
operations.

1,150,000 shares of stock were issued in 2001 for financing that did not
occur. Empyrean has instructed its transfer agent to cancel the shares. Under
Nevada law, the shares cannot be formally and unilaterally canceled without
court adjudication. The other party has refused to cooperate. These shares have
been removed from the total outstanding shares as disclosed and remain a
reconciling item until Empyrean has the funds to force formal cancellation.

NOTE 7 - STOCKHOLDERS EQUITY

Empyrean issued 37,500 shares of common stock for $1,000 cash in October
2000.

In connection with the 2001 reverse acquisition, Empyrean issued 25,951 to
the original shareholders of Direction.

In 2001, a director forgave $29,578 of debt owed by Empyrean. This was
recorded as a contribution to capital.

On January 26, 2002, Empyrean acquired all the issued and outstanding shares
of Belfiber by issuing 10,000,000 shares of preferred stock valued at
$1,300,000. Belfiber's only asset was a potential agreement to acquire a
manufacturing company involved in manufacturing non-woven fabric filter
products. This manufacturing agreement did not close and as a result, Empyrean
impaired the carrying value of $1,300,000 in the year ended December 31, 2002.

On January 26, 2002, Empyrean acquired all the issued and outstanding shares
of Basalt by issuing 500,000 common shares valued at $1,300,000. Basalt was
formed to produce coated mineral fiber in the form of continuous Basalt glass
filament for reinforcement of epoxy resins, gasket materials, fine paper and
other products. Basalt did not proceed with this venture and as a result,
Empyrean impaired the carrying value of $1,300,000 in the year ended December
31, 2002.

In 2002, Empyrean issued 932,796 shares of common stock for payment of
$965,599 of accounts payable, 779,774 shares of common stock for services valued
at $807,066 and 249,930 shares of common stock for prepaid consulting expenses
of $258,678. 1,050,413 of the shares were issued to two Empyrean officers.

In 2003, Empyrean issued 540,000 shares of common stock for $9,800 cash.

In 2003, Empyrean issued 400,000 shares of common stock valued at $8,000 for
payment of a $7,500 note payable. The excess of fair value over carrying value
of $500 has been expensed.

In 2003, Empyrean issued 12,200,000 shares of common stock for services
valued at $540,000. 9,000,000 of the shares with value of $390,000 were issued
to two Empyrean officers.

In 2003, Empyrean issued 800,000 shares of common stock in two settlements.
The stock was valued at $38,000. The settlements required 200,000 shares of
unrestricted stock be issued. To facilitate this, the majority shareholder
directly transferred 200,000 shares of their personal holdings. The 200,000
shares have been accounted for as if they were returned to Empyrean and issued
by Empyrean.

In February 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. In June 2004, Empyrean issued 10,000,000 shares
to an Empyrean officer in exchange for services valued at $110,000. In August
2004, Empyrean issued 5,000,000 shares to an Empyrean director in exchange for
services valued at $90,000. In November 2004, Empyrean issued 12,000,000 shares
to an Empyrean director in exchange for services valued at $33,600.

The preferred shares are held by one of Empyrean's directors who is also a
major shareholder of Empyrean. As of January 20, 2005, the board of directors
has not defined the attributes of the preferred stock, to include dividends,
convertibility and participation.

NOTE 8 - FORGIVENESS OF DEBT

In 2002, $68,277 of accounts payable was released by various vendors.

NOTE 9 - STOCK OPTIONS

In 2004 Empyrean granted 3,250 stock options to officers, directors,
employees and consultants to purchase common shares at the closing price on the
date of the grant or $300 per share. These options are immediately exercisable
and expire in April 2010.

NOTE 10 - SUBSEQUENT EVENTS

In January 2005 the Board approved to increase the authorized shares of both
the Common Stock and Preferred Stock. Empyrean's Common Stock was increased to
one billion (1,000,000,000) shares at a par value of $0.001. The Preferred Stock
was increased to two hundred million (200,000,000) shares at a par value of
$0.001.



---



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements of any kind with the company's Independent
Auditors, Malone & Bailey PLLC of Houston, Texas

---



PART III



ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.

The names, ages, and respective positions of the directors, officers, and
significant employees of the Company are set forth below. Mr. Lee has held his
positions since March 2001 and the voluntary resignation of Mr. Anthony Fanale
from the Board of Directors was accepted on August 18, 2004.With the departure
of Mr. Fanale, there are no other person(s) who can be classified as a promoter
or controlling person of the Company.

Robert L. Lee, Director, President and CEO, Secretary and Treasurer. Age 63.

ITEM 10. EXECUTIVE COMPENSATION.

(a) No officer or director of Empyrean is receiving any remuneration in the
form of salaries and/or allowances at this time. However, common stock was
issued for consulting services during the year. 7,500,000 shares were issued to
Mr. Anthony Fanale prior to his departure and 24,500,000 shares to Mr. Robert L.
Lee at prices ranging from of $0.01 to $0.016 cents per share. 500,000 shares
were also issued to Mr. James B. Parsons for legal services.

(b) There are no annuity, pension or retirement benefits proposed to be paid
to officers, directors, or employees of the corporation in the event of
retirement at normal retirement date pursuant to any presently existing plan
provided or contributed to by the corporation or any of its subsidiaries.

(c) No remuneration is proposed to be paid in the future directly or
indirectly by the corporation to any officer or director under any plan that
presently exists.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Mr. Fanale, prior to his departure, sold his shares and is no longer a
substantial shareholder of the company.

The 17,560,413 shares owned by Mr. Lee as on December 31, 2004 represents
35.17 % of the company's outstanding common shares but this has been reduced to
11.14 % by the end of January, 2005.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Other than as set forth in Item 7, there are no relationships, transactions,
or proposed transactions to which the registrant was or is to be a party, in
which any of the named persons set forth in Item 404 of Regulation SB had or is
to have a direct or indirect material interest.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None.

(b) Reports on Form 8-K.

During the year, the company filed two reports on Form 8 K in connection
  with the appointment of Malone & Bailey as the company's Independent Auditors
  and to report the resignation of Mr. Anthony Fanale from the Board of
  Directors.



On January 25, 2005 a Form 8K filing was also done to report the adoption
  of the amendments to the company's Articles of Incorporation approved at the
  Special Shareholders meeting of January 5, 2005 and also the finalization of
  the letter of intent to acquire Tradewinds International Inc.

ITEM14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

1. Audit Fees: Aggregate fees billed for each of the last two (2) fiscal
years for professional services rendered by the principal accountant for the
audit of the annual financial statements and review of financial statements
included on Form 10-QSB:



> 2003: $9,875
>         2004: $7,070

2. Audit-Related Fees: Aggregate fees billed in each of the last two (2)
fiscal years for assurance and related services by the principal accountant that
are reasonably related to the performance of the audit or review of the
financial statements and are not reported previously.

> 2003: $0
>         2004: $0

3. Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years
for professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning.



> 2003: $0
>         2004: $0

4. All Other Fees: Aggregate fees billed in each of the last two (2) fiscal
years for products and services provided by the principal accountant, other than
the services previously reported.

> 2003: $0
>         2004: $0

5. Audit Committee Pre-Approval Procedures. The Board of Directors has not,
to date, appointed an Audit Committee.

---



SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

EMPYREAN HOLDINGS, INC.



/s/ Robert L. lee

Robert L. Lee, President and CEO

Date:     March
21, 2005



In accordance with the Exchange Act,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.





|/s/ Robert L. Lee                |  |  
|-------------------------------- |  | -
|Robert L. Lee, President and CEO |  |  
|Date:   March 21, 2005           |  | :



---