UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549



FORM
10-QSB



|                                                                      |                                                                                  
|--------------------------------------------------------------------- | ---------------------------------------------------------------------------------
|(Mark One)
[X ]                                                       | QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|For
the quarterly period ended __September 30, 2007_                 
|[
   ]                                                                | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|For
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)



Issuers
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)

Check
whether the issuer

(1)

filed
all documents and reports required to be filed by Section  13 or 15(d) of
the Exchange Act during the last 12months(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 shell company (as defined in Rule 12b-2 of the
Exchange Act).
               Yes
  (__) No (X)

As
of September 30, 2007, there were 9,858,066* shares of common stock issued and
outstanding

Note:
* Includes 22,501 shares on hold and awaiting return from third party

Transitional
Small Business Disclosure Format (Check one): Yes [   ] No [X]







---



PART I  FINANCIAL INFORMATION

Item
1. Financial Statements.

Following
are the unaudited financial statements for the period ended September 30,
2007:



























































---

EMPYREAN HOLDINGS, INC.

(A
Development Stage Company)

CONSOLIDATED
BALANCE SHEET

(Unaudited)







September
 30,          December 31,

ASSETS
                                                  2007
               2006

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



Current Assets

Cash
                                               $
 11,071          $
   35,443

Note receivable
                                        5,514
             100,000

Deposits and
prepaid expenses
                          9,616
                 525

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

Total
Current Assets
                              26,201
             135,968



Real estate investment property
                        509,762
             386,500

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

Total Assets
                                   $
535,963          $
  522,468



===========
     ==============





LIABILITIES AND STOCKHOLDERS
EQUITY



LIABILITIES



Current Liabilities

Accounts
payable
                                   $
27,949        $
    15,264

Notes payable
                                           164
                  -

Notes
payable-related party
                          17,076
             16,275

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

Total
Current Liabilities
                       45,189
             31,539

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





Commitments and
Contingencies



STOCKHOLDERS EQUITY



Preferred
stock, $.001 par, 200,000,000 shares
       15,140
             11,000

authorized,
15,140,000 and 11,000,000 shares

issued
and outstanding, respectively

Common
stock, $.001 par, 1,000,000,000 shares
         9,858
              9,858

authorized,
9,858,066 shares issued and outstanding

Additional
paid in capital
                         1,783,634
         1,415,774

Deficit
accumulated during the development stage   (1,317,858)

(945,703)

-----------

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

Total
Stockholders Equity
                         490,774

490,929

-----------

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

Total
Liabilities and Stockholders Equity     $  535,963
        $ 522,468

===========

==============













See accompanying
notes to financial statements.













---

EMPYREAN HOLDINGS, INC.

(A Development
Stage Company)

CONSOLIDATED
STATEMENTS OF INCOME & EXPENSES

UNAUDITED





|                                                                                  |                                    |                                      |                                 |             |              
|--------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------ | ------------------------------- | ----------- | -------------
|                                                                                  | Three Months Ended   September 30, | Nine Months Ended      September
30, | Inception Through
September 30,
|                                                                                  | 2007                               | 2006                                 | 2007                            | 2006        | 2007         
|INCOME                                                                            |                                    |                                      |                                 |             |              
|Sale
of real estate                                                               | $
  180,500                        | $
       -                           | $
 180,500                      | $
       -  | $
   180,500 
|Rental
income and other                                                           | 8,559                              | -                                    | 8,559                           | 6,714       | 15,273       
|Total
income                                                                      | 189,059                            | -                                    | 189,059                         | 6,714       | 195,773      
|                                                                                  |                                    |                                      |                                 |             |              
|EXPENSES                                                                          |                                    |                                      |                                 |             |              
|General
& administrative                                                          | 198,053                            | 14,873                               | 316,857                         | 120,216     | 844,312      
|Depreciation
expense                                                              | -                                  | -                                    | -                               | -           | 21,232       
|Interest
expense                                                                  | 322                                | 3,511                                | 1,573                           | 17,821      | 79,999       
|Cost
of real estate sold                                                          | 170,000                            |                                      | 170,000                         |             | 170,000      
|Cost
of recapitalization                                                          | -                                  | -                                    | -                               | -           | 115,479      
|Impairment
loss on property                                                       | 78,738                             | -                                    | 78,738                          | -           | 90,238       
|Loss
on sale of property                                                          | -                                  | 18,631                               | -                               | 18,631      | 43,975       
|Interest
income                                                                   | (1,995)                            | -                                    | (5,953)                         | -           | (5,953)      
|Loss
on abandonment of
          investment
property                              | -                                  | -                                    | -                               | -           | 154,350      
|                                                                                  |                                    |                                      |                                 |             |              
|Total
expenses                                                                    | 445,118                            | 37,015                               | 561,215                         | 156,668     | 1,513,632    
|                                                                                  |                                    |                                      |                                 |             |              
|Net
loss                                                                          | $
(256,059)                        | $
 (37,015)                          | $
(372,156)                     | $
(149,954) | $
(1,317,859)
|                                                                                  |                                    |                                      |                                 |             |              
|Deemed
dividend on preferred stock issuance                                       | -                                  | -                                    | 373,200                         | -           | 373,200      
|                                                                                  |                                    |                                      |                                 |             |              
|Net
loss attributable to common shareholders                                      | $
(256,059)                        | $
 (37,015)                          | $
(745,356)                     | $
(149,954) | $
(1,691,059)
|                                                                                  |                                    |                                      |                                 |             |              
|Basic
and diluted net loss       attributable to
common        shareholders - per |                                    |                                      |                                 |             |              
|common
share                                                                      | $
   (0.03)                        | $
   (0.00)                          | $
   (0.08)                     | $
   (0.02) |              
|                                                                                  |                                    |                                      |                                 |             |              
|Weighted
average common shares outstanding  basic and diluted                    | 9,858,066                          | 7,858,066                            | 9,858,066                       | 7,672,445   |              
|                                                                                  |                                    |                                      |                                 |             |              





See accompanying
notes to financial statements











---



EMPYREAN HOLDINGS,
INC.

(A Development
Stage Company)

CONSOLIDATED
STATEMENTS OF CASH FLOWS

UNAUDITED



|                                                    |                                 |                                 |               
|--------------------------------------------------- | ------------------------------- | ------------------------------- | --------------
|                                                    | Nine Months Ended
September
30, | Inception Through September 30,
|                                                    | 2007                            | 2006                            | 2007          
|                                                    |                                 |                                 |               
|CASH
FLOWS FROM OPERATING ACTIVITIES                |                                 |                                 |               
|Net
loss                                            | $    (372,156)                  | $  (149,954)                    | $  (1,317,859)
|Adjustments
to reconcile net loss to                |                                 |                                 |               
|cash
used in operating activities:                  |                                 |                                 |               
|Stock
issued for services                           | -                               | 63,000                          | 243,000       
|Stock
based compensation                            | -                               | -                               | 120,000       
|Cost
of recapitalization                            | -                               | -                               | 115,479       
|Loss
on sale of property                            | 3,038                           | 18,631                          | 47,015        
|Impairment
loss on property                         | 78,738                          | -                               | 90,238        
|Loss
on abandoned investment property               | -                               | -                               | 154,354       
|Depreciation                                        | -                               | -                               | 21,232        
|Changes
in:                                         |                                 |                                 |               
|Prepaid
and other current assets                    | (9,091)                         | -                               | (9,613)       
|Accounts
payable                                    | 12,848                          | (29,604)                        | 137,582       
|                                                    |                                 |                                 |               
|NET
CASH USED IN OPERATING ACTIVITIES               | (286,623)                       | (97,927)                        | (398,572)     
|                                                    |                                 |                                 |               
|CASH
FLOWS FROM INVESTING ACTIVITIES                |                                 |                                 |               
|Proceeds
from sale of real estate                   | 166,963                         | 168,368                         | 496,983       
|Issuance
of note receivable                         | 94,486                          | -                               | (5,514)       
|                                                    |                                 |                                 |               
|NET
CASH PROVIDED BY INVESTING ACTIVITIES           | 261,449                         | 168,358                         | 491,469       
|                                                    |                                 |                                 |               
|CASH
FLOWS FROM FINANCING ACTIVITIES                |                                 |                                 |               
|Payments
on related party debt                      | (6,842)                         | (163,600)                       | 105,063       
|Proceeds
from related party debt                    | 7,644                           | 97,420                          | (189,427)     
|Proceeds
from issuance of common stock              | -                               | -                               | 2,538         
|                                                    |                                 |                                 |               
|NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 802                             | (66,180)                        | (81,826)      
|                                                    |                                 |                                 |               
|NET
CHANGE IN CASH                                  | (24,372)                        | 4,261                           | 11,071        
|Cash
balance, beginning of period                   | 35,443                          | 140                             | -             
|Cash
balance, end of period                         | $       11,071                  | $
         4,401                | $      11,071 
|                                                    |                                 |                                 |               
|SUPPLEMENTAL
DISCLOSURES:                           |                                 |                                 |               
|Cash
paid for interest                              | $
          -                   | $
          -                   | $      -      
|Cash
paid for income taxes                          | $
          -                   | $
          -                   | $
          - 
|                                                    |                                 |                                 |               
|NON-CASH
INVESTING AND FINANCING ACTIVITIES:        |                                 |                                 |               
|Shares
issued to settle related party debt          | $
          -                   | $      72,759                   | $      72,759 
|Shares
issued for property                          | $      372,000                  | $     772,000                   | $    1,517,200
|Forgiveness
of related party debt                   | $
          -                   | $
   226,334                    | $
   226,334  





See accompanying
notes to financial statement







---





EMPYREAN HOLDINGS,
INC.

(A
Development Stage Company)

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS







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 2006 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.



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



NOTE 2
- GOING CONCERN

As
shown in the accompanying financial statements, Empyrean has incurred net losses
of $372,156 through the nine months ended September 30, 2007, and an accumulated
deficit of $1,317,858 as of September 30, 2007. These conditions raise
substantial doubt about Empyrean's ability to continue as a going concern.
Management is trying to raise additional capital through sales of common stock
as well as seeking financing from third parties. The financial statements do not
include any adjustments that might be necessary if Empyrean is unable to
continue as a going concern.



NOTE 3  NOTE RECEIVABLE



In December 2006, the Company
loaned $100,000 to Independent Management Resources, LLC (IMR). The loan bears
interest at 8% per annum had an original maturity date of March 1, 2007. The due
date has been extended by mutual agreement of the parties to December 31, 2007.



NOTE 4  NOTE PAYABLE



During the current period,
Empyrean received advances totaling ($96,124) from Independent Management
resources.  The loan bears interest at 8% per annum having a maturity date
of October 28, 2007.



NOTE 5 - 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
$ 17,077 inclusive of accrued interest through September 30, 2007.



Advances made by an officer in
the total amount of $6,500 earlier in the year were fully repaid during August
2007.





NOTE 6  SUBSEQUENT EVENTS.



During October 2007, two of the
town homes in Kewaskum, Wisconsin were sold for total proceeds after transaction
costs of $307,762. Proceeds from these sales are being used as







---

working
capital and for other corporate activities.  Because the proceeds received
were less than the original carrying value of these assets, an impairment equal
to the excess book value of $78,738 was recorded as of September 30, 2007 to
reflect the assets at their net realizable value.



During November 2007, two of
the Companys officers, as compensation for the extensive consulting services
provided for Empyrean Staffing, Inc. and Empyrean Properties, Inc. received cash
payments amounting to $145,000.













---

Item 2.  Management's Plan of Operation.



The
company continues to pursue its long-term corporate development plan to become a
diversified holding company providing competitive returns to shareholders and
investors. A brief update on progress made by the Companys subsidiaries
follows.



Empyrean Properties, Inc. (Empyrean Properties): The six
unencumbered real properties owned by Empyrean  Properties  near Green
Bay and Kewaskum, Wisconsin have a carrying value of $758,500.During the quarter
it was decided to sell the two town homes in Kewaskum to raise funds for working
capital and to move ahead with the business plans of the other
 subsidiaries discussed below.



Empyrean Staffing, Inc. (Empyrean Staffing) has made
satisfactory progress on the start up of its Professional Employer Organization
(PEO) business.  A verbal mutual agreement was made with an affiliate
private company that decided to withdraw from payroll processing to take over
this business.  From mid-August 2007 Empyrean Staffing commenced payroll
processing for 31 companies from its Roseville, California office and intends to
gradually convert these clients to full PEO services. The use of support
services from PEO Advisory and Outsourcing companies are being pursued.



Empyrean Financial Services, Inc. (EFS) will concentrate on
offering its financial accounting and consulting services to the PEO Clients of
Empyrean Staffing that require these services. The possibility of creating a
niche market by providing specialized financial services custom made for PEO
clients is being reviewed.



Empyrean Construction, Inc., (Empyrean Construction) should
receive its contractors licenses for the States of California and Nevada in the
near future. This subsidiary has been prospecting for projects and is expected
to undertake construction jobs soon after the licenses are approved. The goal of
offering a majority interest in Empyrean Construction to an entity that will
contribute industry expertise, related services, goodwill and existing
development projects is still a possibility.



Progress since September 30, 2007



1.
In October 200, two town homes in Kewaskum, Wisconsin were sold for total net
proceeds after transaction costs of $307,762. Proceeds from these sales are
being used as working capital and for other corporate activities.  Because
the proceeds received were less than the original carrying value of these
assets, an impairment equal to the excess book value of $78,738 was recorded as
of September 30, 2007 to reflect the assets at their net realizable value.



Liquidity



During
the next 12 months, significant working capital will be needed to fund
businesses to be undertaken by the companys subsidiaries and to pursue other
business opportunities.



A
decision has yet to be made on the source of financing for the Company or the
amounts required 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. There can be no
guarantee that any such financing will be successful, or that even if financing
is obtained it will be available on terms that are beneficial to the Company.



Without
locating 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
3.  Controls and Procedures



As of
 September 30, 2007, 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
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, 2007, that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.





PART II
 OTHER INFORMATION





Item
5. Other information



Board
meetings:



1.

The
Board of Directors, at a special meeting held in Houston, Texas on September 26,
2007 unanimously approved the sale of the two town homes in Kewaskum, Wisconsin
and that the maturity date for the IMR, LLC  Note receivable of $100,000 be
extended to December 31, 2007









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

In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



EMPYREAN HOLDINGS,
INC.







/s/ Robert L. Lee

Robert L. Lee,

President
and Director

Date:
November 19, 2007