U.S. SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549



AMENDED 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, 2002



EMPYEAN
COMMUNICATIONS, INC.

----------------------------

(Name of Small
Business Issuer in its charter)



|Nevada                                             | 000-30118                    | 88-0413417                  
|-------------------------------------------------- | ---------------------------- | ----------------------------
|State 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

-----------------------------



Direction
Technologies, Inc.

-----------------------------

(Former Name)



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, 2002 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 14, 2003: $216,553.00



Number of shares of
Common Stock, $0.001 par value per share, of the registrant outstanding as of
December 31, 2002: 3,675,951



Number of shares of
Preferred Stock of the registrant outstanding as of December 31, 2002:
10,000,000



DOCUMENTS INCORPORATED
BY REFERENCE

No documents are
incorporated herein by reference.



Transitional Small
Business Issuer Format Yes No X

---- ----



PART I.

ITEM 1. DESCRIPTION OF
BUSINESS.



(a) Business
Development.



Empyrean Communications,
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., The business office of the Company is located at
2537 South Gessner, Suite 114, Houston Texas 77063. The Company operates on the
calendar fiscal year. 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, and will produce a
direct and tangible benefit to the Company in the future.



(b) Business of Issuer.



Empyrean
Communications, Inc., formed as a private company in 2000, was originally
intended to be a broadband provider capable of delivering fiber capacity to
OC-192 levels. The company, however, after considering the plight of the
broadband industry in late 2001 and early 2002 decided that it would be prudent
to undertake other businesses that would be capable of providing it with income
streams. After detailed study, a decision was made to move into the Basalt Fiber
manufacturing and derivative products business.

In January 2002, the
company purchased two Virginia corporations, Basalt Fiber Company and Belfiber
Corporation, which are involved in the Basalt Fiber industry, through a stock
swap. Empyrean Communications Inc. issued 10,000,000 common shares and
10,000,000 preferred stock for all the outstanding shares of these two
companies. Mr. Anthony Fanale, the previous owner of these two companies and an
experienced expert in the Basalt fiber Industry joined the company's Board of
Directors and continues to be responsible for all the activities of these Basalt
fiber related companies.



BASALT FIBER COMPANY

Executive Summary



Basalt Fiber Company
(BFC), by concentrating on its unique strengths, key customers, and niche
markets, will attempt to penetrate the industrial fiber market. At the same time
BFC will strive to meet projected sales goals so as to produce a favorable gross
margin on sales, cash management and working capital.



BFC, once its
manufacturing facilities are set up, will produce coated mineral fiber in the
form of continuous basalt glass filament. The company will target the 9 million
ton worldwide market for the reinforcement of epoxy resins, gasket materials,
fine paper and other products. The basalt products for the thermal insulation,
acoustics and corrosion resistive application will have an extremely large
market potential. Since the acquisition of BFC, top management has made
sustained efforts to seek the financing required to set up the manufacturing
plant that will be located in South Hill, Virginia. Applications for financing
have been and continue to be made to both domestic and overseas Banks and
private Lenders. Despite the intensive efforts made in Panama during July/August
2002, financing terms acceptable to the company could not be obtained. The
depressed economic conditions that prevailed for the whole of 2002 and the
extension into the new year of economic uncertainty has, of course, been a
severe constraint not only to Empyrean Communications, Inc. (ECI) but to the
majority of companies seeking startup capital. Top Management continues to
pursue all avenues for financing and intends to reconsider the use of a Private
Placement to raise $5.00 million from Accredited Investors once the economy
picks up. The Private Placement Memorandum to be used is, in fact, close to
finalization and this capital raising exercise can commence as soon as there is
a significant upturn is the economy.



Corporate Mission



Basalt Fiber Company
(BFC) is a Virginia corporation created for the sole purpose of introducing
basalt fiber and related products to the American market. BFC hopes to generate
a fair return for shareholders and finance continued growth and the development
of quality products with earned profits. The company will strive to maintain a
friendly, fair and creative work environment, and one that respects diversity,
new ideas and hard work.



BFC anticipates that
basalt fiber, in specific markets, will replace the commonly used E and S glass
products. Basalt fiber is an advanced technology for the fiber and composites
industry that offers the potential to replace many of the conventional fiber
glass products



Products



Derived in part from
the U.S. Environmental Agency's ban on asbestos, BFC believes that the
available market in the United States for basalt filament is currently 100,000
tons per year and will grow rapidly, once a national source is in commercial
production.



BFC will produce and
market basalt fiber filament, a filament relatively new to the U.S., which can
be used in stead of E-glass filament and in many cases, instead of S-glass and
ECR-glass filament. Beyond the use as a replacement for E-glass filament, basalt
fiber filament can be used in special applications where E-glass cannot be used
due to its properties, like in higher temperature applications. As in these
applications a much higher priced special glass and other filaments are used,
basalt fiber filament can command higher prices that will make the business more
profitable.



BFC will initially
offer its products to their niche markets by asking a higher price for its
filament, it will maximize equity for its investors. Later, as production
capacity is expanded, the penetration into larger, lower priced markets will be
made to obtain increased sales and profits. Also, to maintain the market lead,
the company intends to increase research and development, in order to enhance
market and technology leadership.



Since BFC expects to
be the first in the western hemisphere to introduce this product, the company
will have to initially invest funds to optimize the bushing and melting
technology. The existing technology available, however, is more than adequate to
be used for initial installation and production. Detailed planning is in place
to allow for production to commence within a year of the financing of $6.00
million being sought is obtained.



Competitive
Comparison



Due to basalt fiber
having technologically advanced properties, the company expects that its major
competitive strength will be the improvement in performance over current Fiber
glass products and its usage in unique applications such as filtration,
separation at high temperatures, corrosive resistance to acid and alkali, higher
insulation temperatures and stronger in tensile strength.



Raw material sourcing



The basalt stone is
in abundance in the Northeastern and Southeastern United States. As the company
will locate its factory in Virginia it will have the advantage of purchasing
basalt stone form a number of locations. BFC can purchase a higher quality of
basalt stone, which has already been tested, from New Jersey and North Carolina.
Once sales increase, the company will be able to buy at more competitive prices,
in view of the increase in requirement volumes.



Testing and
certification of the basalt fiber is an important step in introducing the
product to the available markets. Certain potential buyers have tested basalt
fiber and will be providing the company with the technical data obtained. BFC
also intends to undertake additional testing in the future, to try and identify
new markets.



Marketing issues

Consumers: will be
any application that require high strength, heat resistant fibers

Competition: BFC
knows of no current direct competition from existing companies. However, as the
industry is highly competitive, the company expects that competition will emerge
within the next five (5) years



Government and
Industry: BFC anticipates that continuous basalt fiber filament will have strong
and active industrial and research support. It should also be welcomed as an
asbestos alternative with no negative health consequences.



Price base: Price of
basalt fiber should be close to fiberglass. However, technical superiority over
glass and its special usage applications may command a premium for certain
specific applications.



Technology



Continuous basalt
fiber filament has a melting point approaching that of ceramic fiber.
Furthermore, basalt fiber has high tensile strength, excellent fiber/resin
adhesion and the ability to be easily processed using conventional processes and
equipment. There is also available technology to enhance the properties of
basalt fibers. Continuous basalt fiber filament has a window of opportunity for
acceptance in several new applications in the friction, textile, composites,
cement and paper industries. This window of opportunity should be available for
the next 2 to 3 years and it is the company's intention to move as swiftly as
possible in order to exploit the situation to its maximum.



Applications



Basalt fiber is the
effective replacement for the ecology-dangerous asbestos, fiberglass and natural
or synthetic fibers used in the manufacturing of technical fibers. Basalt fiber
and fabrics are far superior to other modern day fiber materials in their
properties and technical parameters,- low volume mass, wide application
temperature range, an ability to absorb water 10 times lower than the same
parameter of fiberglass or other fibers, high chemical resistance to alkali,
acids and other aggressive environments, low thermal conductivity and high
ability to absorb sound. Unique modern ecology-safe technology, inexpensive raw
materials, high mechanical, acoustic-thermal and electric insulating, filtering
and other properties of basalt fiber and derivative products are anticipated to
be in demand in different segments of industry, such as:



Aviation (engine and
parts insulation, acoustic insulation of exhaust systems in gas-dynamic units)



Electronic
(fabrication of printed circuit boards with high thermal and stable electric
properties)

Refinery and chemical
(use in filters to clean process air from dust and waste water from oil
products)



Automotive (engine
and body insulation; use in brake shoe as alternative to asbestos)



Construction
(nonflammable durable construction parts as alternative to wooden parts; soft
and hard roof materials)



Shipbuilding (thermal
insulation as alternative to asbestos)



Bag filters (Basalt
fiber is superior to traditionally used filter materials by their ability to
withstand high temperature, low water absorption (less than 1%), high chemical
stability and low thermal conductivity)



The superiority of
basalt fiber and its derivative products allows it to have many more
applications in Paints/Caulks/Coatings/Sealants, Plastics, Cement reinforcement,
Heat shields, rubber products, Asphalt/Bitumen and Paper products.



BELFIBER CORPORATION



Management report



Belfiber Corporation
(BF) was acquired in January 2002, and became a wholly owned subsidiary of
Empyrean Communications Inc. Prior to the acquisition, BF had entered into an
agreement to purchase all the assets of Air Purator Corporation (APC), subject
to certain conditions. The company was, however, unable to fulfill all the
conditions of the agreement and the purchase of APC did not occur. Once it was
confirmed that the purchase of APC could not be concluded in May 2002, immediate
steps were taken by management to seek other business opportunities for BF. The
anticipated revenues for BF to be obtained through the purchase of APC were
therefore not obtained, and this had an adverse affect on the operating revenues
for the company for the year ending December 31, 2002. Currently, negotiations
are being undertaken to acquire a suitable basalt related business for BF.
Should it not be possible to close on this acquisition in the near future,
management intends to consider the other alternatives available for the future
of this subsidiary company.



ITEM 2. PROPERTIES



Empyrean
Communications, Inc. does not own any real property. Current lease contract is
for a 140 square feet office in an Executive Suite located at 2537 South Gessner,
Suite 114, Houston Texas, 77063. The terms of the lease covers a period of month
to month at a rate of $500.00 per month.



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 Annual
Stockholders meeting, previously scheduled for on or around July 30, 2002 was
not held due mainly to the serious medical problem experienced by the President
and CEO, Mr. Robert L. Lee. Mr. Lee was hospitalized on July 1, had surgery in
late August 2002 and is now nearing full recovery. It has recently been decided
to hold the postponed Annual Stockholder's meeting on or around September 30,
2003, to deal with normal business. In addition, the shareholders will be asked
to vote on changes to its Articles of Incorporation incorporating a name change,
expanding voting rights for holders of Preferred Stock of the Company and
increases in the Company's authorized preferred and common stock.



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 name Empyrean Communications, Inc. is EPYR



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



The Articles of
Incorporation currently authorize the issuance of 50,000,000 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, 2002, the Company had 3,675,951 shares 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, 2002, no
share purchase warrants were outstanding.



Share Purchase Option



At December 31, 2002,
65,000 share (pre-split) purchase options were outstanding. Each option entitles
the holder to purchase one additional share of the company at $15.00 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 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.



Company management had
decided after considerable review in late 2001 and early 2002, to move the
company into a new direction away from the broadband industry. In January of
2002, the Company acquired, by way of a stock swap, two Virginia
fiber-manufacturing companies, Belfiber Company and Basalt Fiber Company. In so
doing, the Company acquired 100% of all outstanding stock of both companies, and
intends to direct all of its efforts to the development of these companies, as
well as possible future acquisitions of any viable businesses in other sectors
like real estate, financial services, oil and gas and medical nanotechnology.

To reflect more closely
the revamped Business strategy of the company, the Board of Directors has
elected to change the name of the Corporation from Empyrean Communications Inc.
to Uniwelkin Capital Inc.



ITEM 7. FINANCIAL
STATEMENTS



Included herewith are
the following financial statements:











EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(Stated in US
Dollars)





INDEPENDENT AUDITORS'
REPORT



To the Stockholders,

Empyrean Communications, Inc.

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of
Empyrean Communications, Inc. (A Development Stage Company) as of December 31,
2002 and 2001 and the related consolidated statements of loss, stockholders'
equity and cash flows for the two years ended December 31, 2002 and 2001 and for
the two month period ended December 31, 2000 and for the period October 30, 2000
(Date of Incorporation) to December 31, 2002. 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 auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform an audit 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, these consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Empyrean Communications, Inc. as of December 31, 2002 and 2001 and the results
of their operations and their cash flows for the years ended December 31, 2002
and 2001, for the two months ended to December 31, 2000 and for the period
October 30, 2000 (Date of Incorporation) to December 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying financial statements referred to above have
been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company is in the
development stage, has no established source of revenue and is dependent on its
ability to raise capital from shareholders or other sources to sustain
operations. These factors, along with other matters as set forth in Note 1,
raise substantial doubt that the Company will be able to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





|Vancouver, Canada | "AMISANO
      HANSON"     
|----------------- | ---------------------------
|April 15, 2003    | Chartered
      Accountants





EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

CONSOLIDATED BALANCE
SHEETS

December 31, 2002 and
2001

(Stated in US
Dollars)





|ASSETS                                                 | 2002                          | 2001                       
|------------------------------------------------------ | ----------------------------- | ---------------------------
|Current                                                |                               |                            
|Cash                                                   | $                    
      - | $               
      191 
|Prepaid expenses - Notes 4 and 7                       | 258,679                       | -                          
|                                                       | ---------------------------   | ---------------------------
|                                                       | $        
      258,679       | $               
      191 
|                                                       | ===============               | ================           
|LIABILITIES                                           
|Current                                                |                               |                            
|Accounts payable - Note 7                              | $          
      66,891      | $        
      969,217    
|Due to shareholders - Note 7                           | 34,011                        | 20,844                     
|                                                       | ---------------------------   | ---------------------------
|                                                       | 100,902                       | 990,061                    
|                                                       | ---------------------------   | ---------------------------
|STOCKHOLDERS'
      EQUITY (DEFICIENCY)               
|Capital stock                                          |                               |                            
|Authorized:                                            |                               |                            
|50,000,000 common shares, $0.001 par value             |                               |                            
|10,000,000 preferred shares, $0.001 par value          |                               |                            
|Issued:                                                |                               |                            
|2,525,951 (2001:  65,451) common shares - Note 5       | 2,500                         | 788                        
|10,000,000 (2001:  Nil) preferred shares               | 10,000                        | -                          
|Additional
      paid-in capital                       | 10,464,559                    | 5,828,020                  
|Deficit
      accumulated during the development stage | ( 10,319,282)                 | ( 6,818,678)               
|                                                       | ---------------------------   | ---------------------------
|                                                       | 157,777                       | ( 989,870)                 
|                                                       | ---------------------------   | ---------------------------
|                                                       | $      
      258,679         | $          
      191      
|                                                       | ===============               | ================           

Nature and Continuance
of Operations - Note 1

Commitments - Note 5

Contingencies - Note
11

Subsequent Events -
Note 12



|APPROVED BY THE
      DIRECTORS:         |  |                                              
|---------------------------------------- |  | ---------------------------------------------
|                                         |  |                                              
|                                         |  |                                              
|"Robert
      L. Lee"                    |  | "Anthony
      Fanale"                       
|________________________,
      Director |  | _____________________________,
      Director



SEE ACCOMPANYING NOTES





EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

CONSOLIDATED
STATEMENTS OF LOSS

for the years ended
December 31, 2002 and 2001,

for the two months
ended to December 31, 2000

and for the period
October 30, 2000 (Date of Incorporation) to December 31, 2002

(Stated in US
Dollars)





|                                                          |                                |                        |                         | October 30,            
|--------------------------------------------------------- | ------------------------------ | ---------------------- | ----------------------- | -----------------------
|                                                          |                                |                        |                         | 2000                   
|                                                          |                                |                        | Two months              | (Date of Incor-        
|                                                          |                                |                        | ended                   | poration) to           
|                                                          | Years ended
      December 31, | December 31,           | December 31,           
|                                                          | 2002                           | 2001                   | 2000                    | 2002                   
|Expenses                                                  |                                |                        |                         |                        
|Accounting and legal fees                                 | $ 107,385                      | $ 22,796               | $ -                     | $ 130,181              
|Business plan and asset valuation                         | -                              | 16,380                 | -                       | 16,380                 
|Consulting fees - Note 7                                  | 851,766                        | 790,574                | 67,200                  | 1,709,540              
|Office and miscellaneous - Note 7                         | 6,706                          | 18,383                 | 1,575                   | 26,664                 
|Promotion and entertainment                               | -                              | 53,110                 | 392                     | 53,502                 
|Rent - Note 7                                             | 2,974                          | 15,933                 | -                       | 18,907                 
|Travel costs                                              | -                              | 7,350                  | 1,416                   | 8,766                  
|Website expenses                                          | -                              | 20,000                 | -                       | 20,000                 
|                                                          | ---------------------          | ---------------------- | ----------------------- | -----------------------
|Net loss for
      the period before other items          | ( 968,831)                     | ( 944,526)             | ( 70,583)               | ( 1,983,940)           
|Other items:                                              |                                |                        |                         |                        
|Investments written-off - Note 6                          | ( 2,600,000)                   | -                      | -                       | ( 2,600,000)           
|Loss on write-off of technology - Note 3                  | -                              | ( 5,843,140)           | -                       | ( 5,843,140)           
|Accounts payable written-off                              | 68,227                         | -                      | -                       | 68,227                 
|Gain on forgiveness of debt - Note 7                      | -                              | 29,578                 | -                       | 29,578                 
|Miscellaneous income                                      | -                              | 9,993                  | -                       | 9,993                  
|                                                          | ---------------------          | ---------------------- | ----------------------- | -----------------------
|Net loss for
      the period                             | $ (3,500,604)                  | $ ( 6,748,095)         | $ ( 70,583)             | $ (10,319,282)         
|                                                          | ============                   | ============           | =============           | =============          
|Basic loss per
      share                                | $ ( 2.42)                      | $ ( 124.85)            | $ ( 2.78)               |                        
|                                                          | ============                   | ============           | =============           | =============          
|Weighted average
      number of shares
      outstanding | 1,444,672                      | 54,048                 | 25,382                  |                        
|                                                          | ============                   | ============           | =============           | =============          



SEE ACCOMPANYING NOTES





EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

CONSOLIDATED
STATEMENTS OF CASH FLOWS

for the years ended
December 31, 2002 and 2001,

for the two months
ended to December 31, 2000

and for the period
October 30, 2000 (Date of Incorporation) to December 31, 2002

(Stated in US Dollars)

|                                                                                |                              |                         |                        | October 30,           
|------------------------------------------------------------------------------- | ---------------------------- | ----------------------- | ---------------------- | ----------------------
|                                                                                |                              |                         |                        | 2000                  
|                                                                                |                              |                         | Two months             | (Date of Incor-       
|                                                                                |                              |                         | ended                  | poration) to          
|                                                                                | Year ended
      December 31 | December 31             | December 31,          
|                                                                                | 2002                         | 2001                    | 2000                   | 2002                  
|Operating
      Activities                                                      |                              |                         |                        |                       
|Net loss for the period                                                         | $(3,500,604)                 | $ ( 6,748,095)          | $ ( 70,583)            | $ (10,319,282)        
|Items not affecting cash:                                                       |                              |                         |                        |                       
|Loss on write-off of technology                                                 | -                            | 5,843,140               | -                      | 5,843,140             
|Gain on forgiveness of debt                                                     | -                            | ( 29,578)               | -                      | ( 29,578)             
|Accounts payable written-off                                                    | ( 68,227)                    | -                       | -                      | ( 68,227)             
|Investments written-off                                                         | 2,600,000                    | -                       | -                      | 2,600,000             
|Non-cash:                                                                       |                              |                         |                        |                       
|Legal expenses                                                                  | 56,100                       | -                       | -                      | 56,100                
|Consulting expenses                                                             | 750,966                      | -                       | -                      | 750,966               
|Changes in non-cash working capital
      balances
      related to operations: |                              |                         |                        |                       
|Prepaid expenses                                                                | -                            | 16,000                  | -                      | 16,000                
|Accounts payable                                                                | 148,407                      | 874,164                 | 70,583                 | 1,093,154             
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|                                                                                | ( 13,358)                    | ( 44,369)               | -                      | ( 57,727)             
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|Investing
      Activities                                                      |                              |                         |                        |                       
|Cash acquired on business acquisition                                           | -                            | 316                     | -                      | 316                   
|Increase in shareholder loans                                                   | 13,167                       | 20,844                  | -                      | 34,011                
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|                                                                                | 13,167                       | 21,160                  | -                      | 34,327                
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|Financing Activity                                                              |                              |                         |                        |                       
|Proceeds from issuance of common shares                                         | -                            | 22,400                  | 1,000                  | 23,400                
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|Net increase
      (decrease) in cash during
      the period                   | ( 191)                       | ( 809)                  | 1,000                  | -                     
|Cash, beginning of
      the period                                             | 191                          | 1,000                   | -                      | -                     
|                                                                                | ------------------           | ----------------------- | ---------------------- | ----------------------
|Cash, end of the
      period                                                   | $ -                          | $ 191                   | $ 1,000                | $ -                   
|                                                                                | ===========                  | =============           | ============           | ============          

-/Cont'd.



SEE ACCOMPANYING NOTES







EMPYREAN COMMUNICATIONS,
INC.Continued

(A Development Stage
Company)

CONSOLIDATED
STATEMENTS OF CASH FLOWS

for the years ended
December 31, 2002 and 2001,

for the two months
ended to December 31, 2000

and for the period
October 30, 2000 (Date of Incorporation) to December 31, 2002

(Stated in US
Dollars)





|                                                             |                              |               |               | October 30,    
|------------------------------------------------------------ | ---------------------------- | ------------- | ------------- | ---------------
|                                                             |                              |               |               | 2000           
|                                                             |                              |               | Two months    | (Date of Incor-
|                                                             |                              |               | ended         | poration) to   
|                                                             | Year ended
      December 31 | December 31   | December 31, 
|                                                             | 2002                         | 2001          | 2000          | 2002           
|Supplemental
      disclosure of cash flow
      information |                              |               |               |                
|Cash paid for:                                               |                              |               |               |                
|Interest                                                     | $ -                          | $ -           | $ -           | $ -            
|                                                             | =============                | ============= | ============= | =============  
|Income taxes                                                 | $ -                          | $ -           | $ -           | $ -            
|                                                             | =============                | ============= | ============= | =============  

Non-cash Transactions
- Note 10





SEE ACCOMPANYING NOTES









EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY (DEFICIENCY)

for the period October
30, 2000 (Date of Incorporation) to December 31, 2002

(Stated in US Dollars)

|                                                                             |                        |                        |                        |                        |                        | Deficit                |                       
|---------------------------------------------------------------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ----------------------
|                                                                             |                        |                        |                        |                        |                        | Accumulated            |                       
|                                                                             |                        |                        |                        |                        | Additional             | During
      the       |                       
|                                                                             | Preferred
      Shares | Common
      Shares    | Paid-in                | Development            |                       
|                                                                             | Number                 | Par
      Value        | Number                 | Par
      Value        | Capital                | Stage                  | Total                 
|Balance,
      December 31, 1999                                             | -                      | $
      -              | 25,112                 | $
      25             | $
      25,475         | $
      ( 33,976)      | $
      ( 8,476)      
|Issued
      for cash                                                        |                        |                        |                        |                        |                        |                        |                       
|-
      pursuant to a subscription agreement
      -
      at $0.50          | -                      | -                      | 500                    | -                      | 100,000                |                        | 100,000               
|-
      pursuant to the exercise of warrants
      -at
      $0.50           | -                      | -                      | 223                    | -                      | 44,500                 |                        | 44,500                
|Issued
      as partial payment of license fee
      -
      at $3.31        | -                      | -                      | 4                      | -                      | 6,625                  |                        | 6,625                 
|Non-cash
      compensation charge                                           | -                      | -                      | -                      | -                      | 519,120                |                        | 519,120               
|Net
      loss for the year                                                  | -                      | -                      | -                      | -                      | -                      | (
      696,287)       | (
      696,287)      
|                                                                             | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ----------------------
|Balance,
      December 31, 2000                                             | -                      | -                      | 25,839                 | 25                     | 695,720                | (
      730,263)       | (
      34,518)       
|Issued
      for cash pursuant to exercise
      of
      warrants - at $200 | -                      | -                      | 112                    | -                      | 22,400                 | -                      | 22,400                
|Issued
      for acquisition of subsidiary                                   | -                      | -                      | 37,500                 | 38                     | 5,805,370              | -                      | 5,805,408             
|Consolidated
      elimination entry                                         | -                      | -                      | -                      | (
      25)            | (
      694,720)       | 659,680                | (
      35,065)       
|Net
      loss for the year                                                  | -                      | -                      | -                      | -                      | -                      | (
      6,748,095)     | (
      6,748,095)    
|                                                                             | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ----------------------





-/Cont'd.



EMPYREAN COMMUNICATIONS,
INC.Continued

(A Development Stage
Company)

CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY (DEFICIENCY)

for the period October
30, 2000 (Date of Incorporation) to December 31, 2002

(Stated in US
Dollars)





|                                                                          |                        |                        |                        |                        |                        | Deficit                |                       
|------------------------------------------------------------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ----------------------
|                                                                          |                        |                        |                        |                        |                        | Accumulated            |                       
|                                                                          |                        |                        |                        |                        | Additional             | During the             |                       
|                                                                          | Preferred Shares       | Common Shares          | Paid-in                | Development            |                       
|                                                                          | Number                 | Par Value              | Number                 | Par Value              | Capital                | Stage                  | Total                 
|Balance,
      December 31, 2001                                          | -                      | -                      | 63,451                 | 38                     | 5,828,770              | ( 6,818,678)           | ( 989,870)            
|Issued pursuant
      to consulting fee
      agreements
      - at $0.15 | -                      | -                      | 400,000                | 400                    | 59,600                 | -                      | 60,000                
|- at $0.20                                                                | -                      | -                      | 1,200,000              | 1,200                  | 238,800                | -                      | 240,000               
|- at $1.60                                                                | -                      | -                      | 5,000                  | 5                      | 7,995                  | -                      | 8,000                 
|- at $1.80                                                                | -                      | -                      | 170,000                | 170                    | 305,830                | -                      | 306,000               
|- at $4.00                                                                | -                      | -                      | 99,186                 | 99                     | 396,645                | -                      | 396,744               
|- at $5.20                                                                | -                      | -                      | 17,500                 | 17                     | 90,983                 | -                      | 91,000                
|- at $12.18                                                               | -                      | -                      | 15,000                 | 15                     | 182,635                | -                      | 182,650               
|- at $12.39                                                               | -                      | -                      | 15,000                 | 15                     | 185,895                | -                      | 185,910               
|- at $12.72                                                               | -                      | -                      | 15,000                 | 15                     | 190,721                | -                      | 190,736               
|- at $15.00                                                               | -                      | -                      | 25,814                 | 26                     | 387,185                | -                      | 387,211               
|Issued for
      acquisition of subsidiaries
      - at $2.60             | -                      | -                      | 500,000                | 500                    | 1,299,500              | -                      | 1,300,000             
|- at $0.13                                                                | 10,000,000             | 10,000                 | -                      | -                      | 1,290,000              | -                      | 1,300,000             
|Net loss for
      the year                                               | -                      | -                      | -                      | -                      | -                      | ( 3,500,604)           | ( 3,500,604)          
|                                                                          | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ----------------------
|Balance, December
      31, 2002                                          | 10,000,000             | $ 10,000               | 2,525,951*             | $ 2,500                | $ 10,464,559           | $ (10,319,282)         | $ 157,777             
|                                                                          | ==========             | ==========             | ==========             | ==========             | ==========             | ==========             | ==========            



> * Does not include
>   1,150,000 escrowed shares that have been issued at December 31, 2002 and are
>   to be returned to treasury. Refer to Note 4.

EMPYREAN
COMMUNICATIONS, INC.

(A Development Stage
Company)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(Stated in US
Dollars)



Note 1 Nature and
Continuance of Operations



> The Company
>       currently is seeking new business opportunities.
>       
>       These consolidated
>       financial statements have been prepared on a going concern basis. As at
>       December 31, 2002 the Company has accumulated losses totalling
>       $10,319,282. The Company is in the development stage and has no
>       established source of revenue. Its ability to continue as a going concern
>       is dependent upon the ability of the Company to generate profitable
>       operations in the future and/or to obtain the necessary financing to meet
>       its obligations and repay its liabilities arising from normal business
>       operations when they come due.
>       
>       The Company was
>       incorporated in Nevada on April 30, 1998 as Fuji International, Inc. and
>       on December 28, 1998 the Company changed its name to Direction
>       Technologies, Inc. On April 9, 2001, the Company changed its name to
>       Empyrean Communications, Inc.
>       
>       Note 2 Summary
>       of Significant Accounting Policies
>       
>       
>       The consolidated
>       financial statements of the Company have been prepared in accordance with
>       accounting principles generally accepted in the United States of America.
>       Because a precise determination of many assets and liabilities is
>       dependent upon future events, the preparation of financial statements for
>       a period necessarily involves the use of estimates which have been made
>       using careful judgement. Actual results may differ from these estimates.
>       
>       The consolidated
>       financial statements have, in management's opinion, been properly
>       prepared within reasonable limits of materiality and within the framework
>       of the significant accounting policies summarized below:

Development Stage
Company

> The Company is a
>     development stage company as defined in Statement of Financial Accounting
>     Standards No. 7. The Company is devoting substantially all of its present
>     efforts to develop a business. All losses accumulated since inception have
>     been considered as part of the Company's development stage activities.
>     
>     Principles of
>     Consolidation
>     The consolidated
>     financial statements include the accounts of Empyrean Communications, Inc.,
>     a Nevada company and the accounts of its wholly-owned subsidiaries, Empyrean
>     Communications, Inc. ("ECI"), a Texas company, Belfiber Company
>     ("Belfiber") and Basalt Fiber Company ("Basalt"), both
>     Virginia companies. All significant inter-company transactions and balances
>     have been eliminated on consolidation.
>     
>     
>     Note 2 Summary of
>     Significant Accounting Policies - (cont'd)

Income Taxes

> The Company uses the
>     liability method of accounting for income taxes pursuant to Statement of
>     Financial Accounting Standards, No. 109 "Accounting for Income
>     Taxes".
>     
>     Basic Loss Per Share
>     
>     The Company reports
>     basic loss per share in accordance with Statement of Financial Accounting
>     Standards No. 128 "Earnings Per Share". Basic loss per share has
>     been calculated based upon the weighted average number of shares outstanding
>     during the period. Diluted loss per share has not been provided as it would
>     be anti-dilutive.
>     
>     Fair Value of
>     Financial Instruments
>     
>     The carrying value
>     of cash, accounts payable and due to shareholders approximates fair value
>     because of the short-term maturity of those instruments. Unless otherwise
>     noted, it is management's opinion that the Company is not exposed to
>     significant interest, currency or credit risks arising from these financial
>     instruments.
>     
>     Stock-based
>     Compensation
>     
>     The Company has
>     elected to account for stock-based compensation following APB No. 25
>     "Account for Stock Issued to Employees", and provides disclosure
>     requirements under SFAS No. 123 "Accounting for Stock-based
>     Compensation".
>     
>     Impairment of
>     Long-lived Assets
>     The Company reports
>     the impairment of long-lived assets and certain identifiable intangibles in
>     accordance with Statement of Financial Accounting Standards No. 121,
>     "Accounting for the Impairment of Long-lived Assets to be Disposed
>     Of". Certain long-lived assets and identifiable intangibles held by the
>     Company are reviewed for impairment whenever assets or changes in
>     circumstances indicate the carrying amount of any assets may not be
>     recoverable. Accordingly, an impairment loss is recognized in the period it
>     is determined.
>     
>     New Accounting
>     Standards
>     
>     Management does not
>     believe that any recently issued, but not yet effective accounting standard
>     if currently adopted could have a material effect on the accompanying
>     financial statements.

Note 3 Business
Acquisition



> By an agreement
>       dated February 23, 2001, the Company acquired all of the outstanding
>       common shares of ECI by issuing 37,500 common shares (post-consolidation
>      - 750,000 shares) of the Company.
>       
>       As a result of
>       this transaction, the shareholders of ECI acquired control of the Company
>       and consequently ECI is deemed to be the acquirer. The acquisition has
>       been accounted for using the purchase method of accounting, as a reverse
>       transaction, and the consolidated financial statements are a continuation
>       of the operations of ECI and not of Empyrean Communications, Inc. The
>       operations of ECI are included in the consolidated statement of loss from
>       March 8, 2001, the effective date of the acquisition. Comparative figures
>       presented are those of the acquirer, ECI. The net assets (liabilities)
>       acquired are as follows:



|Total assets                        |  | $ 16,316                
|----------------------------------- |  | ------------------------
|Total liabilities                   |  | 54,048                  
|                                    |  | ------------------------
|Net asset
      deficiency          |  | ( 37,732)               
|Amount assigned to
      technology |  | 5,843,140               
|                                    |  | ------------------------
|Purchase price                      |  | $ 5,805,408             
|                                    |  | ==============          



> ECI's principal
>       business is the development of bandwidth technology.
>       
>       During the year
>       ended December 31, 2002, the Company has written-off the amount assigned
>       to technology of $5,843,140 as the amount may not be recoverable.

Note 4 Prepaid
Expenses - Notes 7 and 12



> Prepaid
>       expenses represent prepaid consulting fees paid pursuant to consulting
>       agreements with terms of one year.
>       
>       Note 5 Capital
>       Stock - Note 12
>       
>       During the year
>       ended December 31, 2002, the Company approved a 1 new for 20 old reverse
>       split of its common shares. The Company has reflected this reverse split
>       retroactively.
>       
>       During the year
>       ended December 31, 2001, the Company approved a 1 new for 20 old reverse
>       split of its common shares. The Company has reflected this reverse split
>       retroactively.
>       
>       
>       Note 5 Capital
>       Stock - Note 12 - (cont'd)
>       
>       Escrow Shares
>       By agreement dated
>       November 29, 2000, the Company engaged a party to provide or arrange for
>       one or more financings and to provide custodial services, with respect to
>       certain assets. Pursuant to this agreement, the Company issued 900,000
>       common shares as collateral for future financings. No financing has
>       materialized and the shares are being held in escrow. The Company will
>       return the shares to treasury upon receipt of the shares.
>       
>       By agreement
>       dated October 1, 2000, the Company agreed to purchase certain
>       telecommunication services for a period of 10 years commencing March 1,
>       2002. Pursuant to the terms of the agreement, the Company has issued
>       250,000 common shares in escrow. During the year ended December 31, 2002,
>       the vendor has served notice to terminate the contract. The Company will
>       return the shares to treasury upon receipt of the shares.
>       
>       Stock-based
>       Compensation
>       Effective April
>       17, 2000, the Company granted stock options to employees of the Company
>       (officers, directors and employees) and consultants to the Company to
>       purchase common shares of the Company at the closing price of the Company's
>       common stock on the date of the grant. The options have been granted with
>       a term of 10 years. There are no specific vesting requirements under the
>       options.
>       
>       Presented
>         below is a summary of the stock option activity for the years shown:



|                                 |                           | Weighted       
|-------------------------------- | ------------------------- | ---------------
|                                 | Number of                 | Average        
|                                 | Stock Options             | Exercise Price 
|Granted                          | 1,300,000                 | $0.75          
|                                 | ------------------------- |                
|Balance, December
      31, 2000 | 1,300,000                 | $0.75          
|1:20 reverse split               | (1,235,000)               | -              
|                                 | ------------------------- |                
|Balance, December
      31, 2001 | 65,000                    | $15.00         
|1:20 reverse split               | (61,750)                  | -              
|                                 | ------------------------- |                
|Balance, December
      31, 2002 | 3,250                     | $300.00        
|                                 | ================          | ===============



> The number of
>       stock options outstanding is equal to the number exercisable as there are
>       no vesting provisions.
>       
>       Because of the
>       reverse take-over transaction (Note 3), the disclosures required by APB
>       No. 25 have not been provided as they would not be considered meaningful.
>       
>       
>       Note 5 Capital
>       Stock - Note 12 - (cont'd)
>       
>       Stock-based
>       Compensation - (cont'd)
>       The following
>       common share purchase options were outstanding at December 31, 2002
>       entitling the holders thereof the right to purchase one common share for
>       each option held:



|                                       |                         | Exercise Price |               
|-------------------------------------- | ----------------------- | -------------- | --------------
|                                       | Number of
      Options | Per Share      | Expiry Date   
|Consultants                            | 1,750                   | $300           | April 17, 2010
|Officer, directors
      and employees | 1,500                   | $300           | April 17, 2010
|                                       | 3,250                   |                |               



> Note 6 Investments
>       Written-off
>       
>       
>       By agreement
>       dated January 26, 2002, the Company acquired all the issued and
>       outstanding common shares of Belfiber by issuing 10,000,000 preferred
>       shares of the Company at $0.13 per share.
>       
>       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 the Company wrote-off the
>       acquisition cost of $1,300,000 in the year ended December 31, 2002.
>       
>       Further to this
>       agreement, the Company acquired all the issued and outstanding common
>       shares of Basalt by issuing 10,000,000 pre-split (500,000 post-split)
>       common shares of the Company at $0.13 per share.
>       
>       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 the
>       Company has written off the acquisition price of $1,300,000 in the year
>       ended December 31, 2002. Basalt and Belfiber did not have any net
>       identifiable assets or net identifiable liabilities.
>       
>       Note 7 Related
>       Party Transactions - Note 12
>       
>       During the year
>       ended December 31, 2002:

- The Company was charged
        consulting fees of $295,639 (2001:  224,000;
        2000:  $67,200), office expenses of $Nil
        (2001:  $3,300; 2000:  $Nil) and rent of $Nil
        (2001:  $1,890; 2000:  $Nil) by directors and former
        directors of the Company.
- A former director of the
        Company forgave accounts payable of $Nil (2001:  $29,578;
        2000:  $Nil).





> Note 7 Related
>       Party Transactions - Note 12 - (cont'd)
>       These charges
>       were measured by the exchange amounts, which is the amount agreed upon by
>       the transacting parties.
>       
>       Prepaid
>       expenses include $126,214 (2001:  $Nil) paid to directors and a
>       former director of the Company for prepaid consulting fees.
>       
>       Accounts
>       payable at December 31, 2002 includes $24,157 (2001:  $221,047)
>       owing to directors of the Company in respect to the above noted charges.
>       
>       Amounts due to
>       shareholders are unsecured, non-interest bearing and have no specific
>       terms for repayment.
>       
>       Note 8 Deferred
>       Tax Assets
>       
>       
>       The Financial
>       Accounting Standards Board issued Statement Number 109 in Accounting for
>       Income Taxes ("FAS 109") which is effective for fiscal years
>       beginning after December 15, 1992. FAS 109 requires the use of the asset
>       and liability method of accounting of income taxes. Under the assets and
>       liability method of FAS 109, deferred tax assts and liabilities are
>       recognized for the future tax consequences attributable to temporary
>       differences between the financial statements carrying amounts of existing
>       assets and liabilities and their respective tax bases. Deferred tax assets
>       and liabilities are measured using enacted tax rates expected to apply to
>       taxable income in the years in which those temporary differences are
>       expected to be recovered or settled.
>       
>       The following
>       table summarizes the significant components of the Company's deferred
>       tax assets:



|                                                  | Total                 
|------------------------------------------------- | ----------------------
|Deferred Tax
      Assets                         |                       
|Non-capital loss
      carryforwards              | $ 671,142             
|                                                  | =============         
|Gross deferred tax
      assets                   | $ 671,142             
|Valuation
      allowance for deferred tax assets | ( 671,142)            
|                                                  | ----------------------
|                                                  | $ -                   
|                                                  | ==============        



> The amount taken
>       into income as deferred tax assets must reflect that portion of the income
>       tax loss carryforwards which is likely to be realized from future
>       operations. The Company has chosen to provide an allowance of 100% against
>       all available income tax loss carryforwards, regardless of their time of
>       expiry.
>       
>       
>       Note 9 Income
>       Taxes
>       
>       
>       No provision for
>       income taxes has been provided in these financial statements due to the
>       net loss. At December 31, 2002, the Company has net operating loss
>       carryforwards, which expire commencing in 2018 totalling $1,973,947, the
>       tax benefit of which has not been recorded in the financial statements.
>       
>       Note 10 Non-cash
>       Transactions
>       
>       
>       Investing and
>       financing activities that do not have a direct impact on current cash
>       flows are excluded from the statement of cash flows. The following
>       transactions have been excluded from the statement of cash flows:
>       During the year
>       ended December 31, 2002:

- The Company issued 1,962,500
        common shares valued at $2,048,250 pursuant to services agreements.
- The Company issued 500,000
        common shares valued at $1,300,000 to acquire Basalt.
- The Company issued 10,000,000
        preferred shares valued at $1,300,000 to acquire Belfiber.

> During the
>         year ended December 31, 2001:

- The Company abandoned its
        agreement to acquire the right to manufacture a proprietary electric
        vehicle technology. As a result, license fees have been reduced by
        $50,000 and accounts payable pertaining to the acquisition of the
        license fees have been reduced by $50,000.
- The Company issued 750,000
        common shares totalling $5,805,408 pursuant to the reverse transaction
        with ECI.



> Note 11 Contingencies
>       
>       
>       Unasserted claims
>       have been made against the Company alleging claims for expenses incurred
>       in respect to the operations of the Company and expenses related to breach
>       of contract. While the results of these claims cannot be predicted with
>       certainty, management of the Company believes the final outcome of these
>       claims will not have an adverse material effect on the Company's
>       financial position or results of operations.

Note 12 Subsequent
Events



> During March 2003,
>       the Company entered into five consulting agreements for a term of one
>       year. The Company will issue 5,200,000 common shares for the consulting
>       services. 3,000,000 of the 5,200,000 common shares will be issued to
>       directors of the Company.

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



The Company has had no
changes over the past two (2) fiscal years in its certifying accountants, nor
has it had any disagreements with its accountants.



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 Mr. Fanale became a Director on February 14, 2002. There are no other
persons who can be classified as a promoter or controlling person of the
Company.



Robert L. Lee, President
and CEO and Director Age 61.



Anthony Fanale -
Director Age 60



ITEM 10. EXECUTIVE
COMPENSATION.



(a) No officer or
director of Empyrean is receiving any remuneration at this time.



(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 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 controls in
excess of 5% of the outstanding shares of the Company by way of his 100%
ownership in Aegis Corporation, a Texas Company that holds 76.78% of the Company's
Preferred and Common shares.



|Title of Class | Name of
      Beneficial Owner | Amount Owned by
      Beneficial Owner
|-------------- | ------------------------------ | --------------------------------------
|Common         | Aegis Corporation              | 501,000 shares                        
|Preferred      | Aegis Corporation              | 10,000,000 shares                     



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.



None



SIGNATURES



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



EMPYREAN COMMUNICATIONS,
INC.





/s/ Robert L.
Lee

Robert L. Lee, President
and CEO

Date:   
July 28, 2003





In accordance with the
Exchange Act, this amended 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                      |  | /s/ Anthony Fanale            
|-------------------------------------- |  | ------------------------------
|Robert L. Lee,
      President and CEO |  | Anthony Fanale,
      Director
|Date:  July
      28, 2003             |  | Date:  July
      28, 2003    





CERTIFICATION PURSUANT
TO SECTION 302

OF THE SARBANES-OXLEY
ACT OF 2002

I, Robert L. Lee,
certify that:

1.
I have reviewed this amended annual report on Form 10-KSB of Empyrean
Communication, Inc. for the year ended December 31, 2002;

2.
Based on my knowledge, this amended annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this amended
annual report;

3.
Based on my knowledge, the financial statements, and other financial information
included in this amended annual report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this amended annual report.

4.
The registrant's other certifying offering officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this amended annual report is being prepared; b) evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this amended annual report (the
"Evaluation Date"); and c) presented in this amended annual report our
conclusions about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.
The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and b) any fraud, whether
or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and

6.
The registrant's other certifying officers and I have indicated in this amended
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:   
July 28, 2003



/s/ Robert L. Lee
Robert L. Lee
President and CEO





CERTIFICATION PURSUANT
TO

SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION
1350)



In connection with
theamended Annual Report of Empyrean Communications, Inc., a Nevada
corporation (the "Company"), on Form 10-KSB for the year ending
December 31, 2002 as filed with the Securities and Exchange Commission (the
"Report"), I, Robert L. Lee, President of the Company, certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that
to my knowledge:



(1) The Report fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and



(2) The information
contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of the Company.



/s/ Robert L. Lee

Robert Lee

President and CEO

Date:   
July 28, 2003