CONTRARY TO THE RULES OF
THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS FILING HAVE NOT
BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE WITH
PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.   UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549 FORM 10-Q  (Mark One)
[X ]
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For
the quarterly period ended __September 30, 2008_[
   ]
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
the transition period from _________________ to
_________________Commission
file number ___0-30118____ EMPYREAN
HOLDINGS INC. (exact
name of small business issuer as specified in its charter)  ___NEVADA_____________________________________(State
or other jurisdiction of incorporation or organization)
_88-0413417________________ (IRS Employer
Identification No.)  11200
Westheimer Rd., Suite 900 Houston,
TX 77042 (address
of principal executive offices)  Registrants telephone number: (713) 243 8731 (Registrants telephone number, including area code)  (Former
name, former address and former fiscal year, if changed since last report) Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  [X] Yes     [  ] No Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
 See the definitions of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act. Large
accelerated filer [  ] Accelerated
filer [  ] Non-accelerated
filer [  ] (Do not check if a smaller reporting company) Smaller
reporting company [X] Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
  (__) No (X) As
of Sept 30, 2008, there were 12,008,066 shares of common stock issued and
outstanding Note:
* Includes 22,501 shares on hold and awaiting return from third party     CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    PART I  FINANCIAL INFORMATION Item
1. Financial Statements. Following
are the unaudited financial statements for the period ended September 30,
2008: EMPYREAN
HOLDINGS, INC(A
Development Stage Company)CONSOLIDATED BALANCE SHEETSept 30, 2008
December 31, 2007CURRENT
ASSETSCash
3,618
$1,969Prepaid
expenses
12,398
7,500Account
Receivable
1,495
1,495Employee
Advance
9,500
-Contractor
License Bonds
10,006
-Deposits
1,175
1,175Real
Estate Held For Sale
97,000
202,000Total
current assets
135,192
$
        214,139Fixed
Assets, net of accumulated depreciation of $11,168 and $2,792
respectively
30,332
38,708TOTAL
ASSETS
$165,524
$252,847LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT
LIABILITIESAccounts
payable - trade
144,106
$64,979Accrued
expenses

180,000Note
Payable - related parties
218,406
157,238Total
current liabilities
542,512
222,217COMMITMENTS
AND CONTINGENCIES

-STOCKHOLDERS'
DEFICITPreferred
stock, $.001 par, 200,000,000 shares authorized, 15,140,000 shares issued
and outstanding
15,140
15,140Common
stock, $0.001 par value per share; 1,000,000,000 shares authorized;
12,008,066 shares issued and outstanding
12,008
10,258Additional
paid-in capital
1,815,734
1,791,234Accumulated
deficit during development stage
(2,219,870)
-1,786,002Total
stockholders' deficit
-376,687
30,630TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
$165,524
$252,847     CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    (A  Development Stage company)CONSOLIDATED STATEMENTS OF INCOME &
EXPENSESThree Months and Nine Months Ended Sept 30, 2008 and 2007
and thePeriod from December 30, 2004 (Inception) through Sept 30,
2008(Unaudited)Three Months
Ended Sept 30
Nine
 Months Ended Sept  30
Inception
through Jun 30,2008
Inception
through Sept 30,20082008
2007
2008
2007INCOMERental
Income

8,559

8,559
6,714
6,714Construction
Income
51,522
-
59,779

8,257
59,779Payroll
Processing and Other
-
-


16,564
16,564Sale
of real estate
-
180,500
94,000
180,500
978,200
978,200Total
Income
51,522
189,059
153,779
189,059
1,009,735
1,061,257COST
AND EXPENSESCost
of real estate sold
-
170,000
114,677
170,000
1,133,146
1,133,146General
and administrative
54,548
198,053
259,190
316,857
1,374,315
1,428,863Compensation
Expense
60,000

206,250

146,250
206,250Impairment
of Note receivable - related party
-
78,738
-
78,738
162,148
162,148Loss
on abandonment of property held for sale
-

-

154,354
154,354Total
Costs and Expenses
114,548
446,791
580,117
565,595
2,970,213
3,084,761OTHER
INCOME (EXPENSES)Interest
income (expense)
560
1,673
(7,530)
4,380
(81,445)
(80,584)Cost
of recapitalization
-



(115,479)
(115,479)-Total
other income (expenses)
560
1,673
(7,530)
4,380
(196,924)
(196,063)NET
LOSS
(62,165)
(256,059)
(433,567)
(372,156)
(2,157,402)
(2,219,567)-Deemed
dividend on preferred stock issuance
-
-

373,200
373,200
373,200Net
loss attributable to common shareholders
(62,466)
(256,059)
(433,868)
(745,356)
(2,530,602)
(2,593,068)     CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    TOTAL
BASIC AND DILUTED NET LOSS PER SHARE
(0.01)
(0.03)
(0.04)
(0.08)BASIC
AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
10,287,167
9,858,066
10,316,333
9,858,066     CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    (A  Development Stage company)CONSOLIDATED STATEMENTS OF CASH FLOWSNine Months Ended Sept 30, 2008 and 2007 and
thePeriod from December 30, 2004 (Inception) through Sept 30,
2008(Unaudited)Nine Months Ended Sept 30,
Inception Through December 31
Inception Through Sept 30CASH
FLOWS FROM OPERATING ACTIVITIES
2008
2007
2007
2008Net
income
(433,868)
(372,156)
(1,786,002)
(2,219,870)Adjustments
to reconcile net income to net cash used for operating activities:Stock
issued for services
26,250

251,000
277,250Stock
based compensation
-

120,000
120,000Cost
of recapitalization
-

115,479
115,479Loss
on sale of property
-
3,038
43,977
43,977Loss
on abandoned
-

154,354
154,354Impairmentloss
on property

78,738
11,500
11,500Write
down of related party n/r and n/p


162,148
162,148Depreciation
expense
8,376

24,024
32,400Changes
in operating assets and liabilities:Other
assets

-
(8,674)
(8,674)Receivables


(1,495)
(1,495)Prepaid
expenses and Other current assets
(24,404)
(9,091)

(24,404)Land
held for sale
105,000

184,500
289,500Accounts
payable and accrued expenses
259,127
12,848
174,449
433,576CASH
USED FOR OPERATING ACTIVITIES
(59,519)
(286,623)
(554,740)
(614,259)CASH
FLOWS FROM INVESTING ACTIVITIESPayments
received on note receivable-related party

-
46,500
46,500Issuance
of note receivable

94,486
(208,648)
(208,648)proceeds
from sale of r/e
-
166,963
330,023
330,023Purchase
of fixed assets


(41,500)
(41,500)CASH
USED FOR INVESTING ACTIVITIES
-
261,449
126,375
126,375CASH
FLOWS FROM FINANCING ACTIVITIESProceeds
from issuance of Common stock


374,538
374,538Proceeds
from related party debt

7,644
345,381
345,381Borrowings
on related party debt
94,841
-
-
94,841Principal
payments on related party debt
(33,673)
(6,842)
(289,585)
(323,258)     CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    CASH
PROVIDED BY FINANCING ACTIVITIES
61,168
802
430,334
491,502NET
DECREASE IN CASH
1,649
(24,372)
1,969
3,618CASH
AT BEGINNING OF YEAR
1,969
35,443
-
0CASH
AT YEAR END
3,618
11,071
1,969
3,618      CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    EMPYREAN HOLDINGS,
INC. (A
Development Stage Company) NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)   NOTE 1 - BASIS OF
PRESENTATION  The accompanying unaudited
interim financial statements of Empyrean Holdings, Inc. have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission, and should be
read in conjunction with Empyreans audited 2007 year end financial statements
contained in the 10-KSB.  In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim period have
been reflected herein.  The results of operations for interim periods are,
however, not necessarily indicative of the results to be expected for the full
year.  NOTE 2
- GOING CONCERN As
shown in the accompanying financial statements, Empyrean has incurred net losses
of $433,868 through the nine months ended September 30, 2008, which increased
the accumulated deficit to $2,593,068 as of September 30, 2008. These conditions
raise substantial doubt about Empyrean's ability to continue as a going concern.
Management is working diligently 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 
RELATED PARTY  Advances made to the Company by
Tom Bojadzijev before his termination as a real estate consultant for the
company continue to accrue interest at 8% per annum. The amount of this Note is
$18,396 inclusive of accrued interest through September 30, 2008.  During the current period,
Empyrean received advances totaling $4,700 from a Director of the companys
wholly owned subsidiary, Empyrean Construction, Inc.  The loan bears
interest at 8% per annum and the amount payable to $45,038 as of September 30,
2008.  As no further advances have
been received from IMR, LLC during the period ending September 30, 2008 the
total outstanding amount due to IMR  including interest has increased
minimally to $146,728 This Note incurs interest at the rate of 8% per annum and
is payable on demand.  Advances made by an officer
total $21,107 as of September 30, 2008.  NOTE 5-COMMON STOCK  The 1,750,000 shares of common
stock awarded by the company to its officer for past consulting services was
issued on August 20, 2008           CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    Item
2.  Management's Discussions and Analysis of Financial Condition and
Results of Operations.   The
economic slow down exacerbated by the serious problems experienced by the
financial sector has had a detrimental effect on the company making any
significant progress on its long-term corporate development plan. The quest to
become a diversified holding company that will eventually provide competitive
returns to shareholders and investors, however, remains high on its priority
list. The progress for this quarter has therefore been slow and many setbacks
were beyond managements control. A brief report on the present situation for
the Companys subsidiaries follows.  Empyrean Properties, Inc. (Empyrean Properties):  Efforts
made to sell or to obtain financing using the lot in Green Bay, Wisconsin that
the company owns as collateral has not been successful. The lot has an appraised
value of $104,000 and  with the present serious downturn in the real
property market it is doubtful that Empyrean Properties will be active till
financing is obtained or share swaps for real properties can be found.   Empyrean Staffing, Inc. (Empyrean Staffing)  Since
the termination of its short lived payroll processing business at the end of
last year, Empyrean Staffing remains dormant. The financing needed for this
subsidiary to make a fresh start as a P.E.O, as outlined in its business plan,
has been included in the financing package being pursued for the company  Empyrean Financial Services, Inc. (EFS)  EFS has also remained dormant and this will continue until
funds are obtained to reactivate the PEO business for Empyrean Staffing.  Empyrean Construction, Inc., (Empyrean Construction)  Due to the difficult
economic environment and the uncertainty of the time period necessary to a
substantial recovery of the construction industry, on October 24, 2008
management decided to shut down Empyrean Construction, Inc. as soon as was
reasonably possible.  As a result management has since closed the
California office and discontinued all operations of Empyrean Construction, Inc.
completely and indefinitely.  Liquidity  During
the next 12 months, significant working capital will be needed to fund Empyrean
Construction , to develop  the companys other subsidiaries and to pursue
other business opportunities.      CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.   Though
several sources of financing are being reviewed a firm decision has yet to be
made on the type of financing or the amounts to be raised for executing its
business plan.  It appears at this stage that either equity or debt
financing, or a combination of both, may be needed to raise sufficient capital
to advance the Companys business. An
offer from a financing company to provide a $10 million Equity line of Credit is
under consideration but there can be no guarantee that any such financing will
be successful or that it will be made available at terms that are beneficial to
the Company.  Without
obtaining additional financing, on favorable terms, the Company may be forced to
scale back or halt the development of the various businesses of its
subsidiaries.  These factors raise substantial doubt about the Companys
ability to continue as a going concern.  Holders of Company stock may be
faced with the inability to liquidate part or all of their investment on terms
which are financially profitable.  Because an investment in Company stock
is highly speculative, investors must be prepared to lose some or all of their
investment.  Item
4.  Controls and Procedures  As of
 September 30, 2008, we carried out an evaluation of the effectiveness of
our disclosure controls and procedures (as defined by Rule 13a-14(c) under the
Securities Exchange Act of 1934) under the supervision and with the
participation of our chief executive officer and chief financial officer.
 Based on and as of the date of such evaluation, the aforementioned
officers have concluded that our disclosure controls and procedures are not
effective for timely gathering, analyzing and disclosing the information we are
required to disclose in our reports filed under the Securities Exchange Act of
1934, as amended. There were no changes in our internal control over financial
reporting (as defined in Rules 13a-15(F) and 15d-15(f) under the 1934 Act)
during the period ended September 30, 2008, that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.      CONTRARY
TO THE RULES OF THE SEC, THE COMPANYS FINANCIAL STATEMENTS INCLUDED IN THIS
FILING HAVE NOT BEEN REVIEWED BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE
WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.    PART II
 OTHER INFORMATION  Item
5. Other information   Item
6. Exhibits  Exhibit
No. Document Location  3(i) Articles
of Incorporation Previously
Filed  3(ii) Bylaws Previously
filed  31.1 Section
302 Certification Included  32.1 Section
906 Certification Included  _______________________________________________________________________   SIGNATURES Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.  EMPYREAN HOLDINGS,
INC.    /s/ Robert L. Lee Robert L. Lee, President
and Director Date:
December 19, 2008