Like other reviews of James Cummins' The Boneyard have pointed out, it's a film that doesn't quite know what it wants to be. The aspects you figure playing larger roles later on, the telepathy and Chinese mysticism angles, end up completely forgotten once the creatures begin reigning terror upon the living stuck in the facility's basement labs (dubbed "the boneyard"). That's fine since the programmer-grade screenplay and acting aren't up to snuff to make these interesting. For some reason, a crotchety Phyllis Diller (sans wig) and Three's Company's Norman Fell show up appearing game with Diller eventually gagging and barfing in a bathroom sink after force-fed a slimy chunk of zombie flesh. The IMDB states Alice Cooper and Clu Gulager were first sought for key roles and it's a safe bet an immediate improvement would have occurred if they would have signed on.
What saves this mish-mash from lingering boredom are the creatures. The three kid ghouls look fantastic being reminiscent of the thin beef jerky-skinned demons of Tales from the Crypt Presents: Demon Knight (1995). They're a genuinely terrifying bunch that seem impossible to shoot at a bad angle. Plus Diller transforms into a towering, bug-eyed monster version of herself with her poodle following suit. So if you find yourself struggling through a needless monologue about suicide or telepathy just wait five minutes until the next tango with the freak beasts.
The Boneyard's identity crisis was actually reflected on the VHS cover above. There was a rental sticker now removed in the corner that denoted "DRAMA" until someone crossed that out and wrote in "HORROR". The VHS was also available in two covers, the black "horror" version pictured and a yellow "comedy" variant with the zombified poodle (as seen on the DVD's cover). It's interesting to note Diller as she appears on the horror cover isn't seen as such in the movie.