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 __June 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 itscharter)

| ___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 lastreport)

Check whether the issuer

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

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 definedin Rule 12b-2 of the Exchange Act). Yes (__) No (X)
As of June 30, 2007, there were 9,858,066* shares of common stock issued andoutstanding

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 June30, 2007:
**Item 2. Management's Plan of Operation.**
The company continues to pursue its long-term corporatedevelopment plan to become a diversified holding company providing competitivereturns to shareholders and investors. A brief update on progress made by theCompany's subsidiaries follows.

Empyrean Properties, Inc. ("Empyrean Properties"): DuringJune 2007, Empyrean Properties acquired four additional real properties locatednear Kewaskum and Green Bay, Wisconsin. These unencumbered properties that havean appraised value of $405,000 and were purchased from Hesperia Advisors Limitedfor $372,000. Full payment was made through the issue of 4,140,000 ConvertiblePreferred shares (one (1) preferred share to four (4) common shares) and thishas increased the carrying value of the six real properties owned by thissubsidiary to $758,500.

Empyrean Staffing, Inc. ("Empyrean Staffing") has madesatisfactory progress on the start up of its Professional Employer Organization(PEO) business. The Business Plan, completed with the assistance of consultantsand advisors in the outsourcing industry, has been well received. EmpyreanStaffing expects to commence business within the next three to four months. 

Empyrean Financial Services, Inc. ("EFS") is still attemptingto obtain clients for its financial accounting and consulting services. EFS alsointends to complement and broaden the scope of Empyrean Staffing's PEO servicesby offering financial accounting and consulting services to PEO Clients in duecourse. 

Empyrean Construction, Inc., ("Empyrean Construction") hasrecently opened an office with a single employee in Sacramento California, butis still waiting for the approval of its applications for contractor's licensesfor the States of California and Nevada. This subsidiary will seek to obtainconstruction jobs once the licenses are approved. The earlier stated objectiveto offer the majority interest in Empyrean Construction to an entity that willcontribute industry expertise, related services, goodwill and existingdevelopment projects is still being pursued.
**Progress since June 30, 2007**
1. In early August 2007 the sale of one town home inKewaskum, Wisconsin was finalized and the net proceeds of $166,962 received isbeing utilized for working capital and to fund other corporate activities

2. In late July 2007, Empyrean Staffing, Inc. receivedapproval from a major insurance company to write workman compensation insurancefor PEO Clients. This subsidiary is proceeding to commence its PEO business, andwill purchase computers, software and office furnishings from an affiliatecompany for its office in Roseville, California. The initial staffing is beingcompleted and the company is expected to be fully operational by the end of theyear.
**Liquidity**
During the next 12 months, significant working capital willbe needed to fund businesses to be undertaken by the company's subsidiaries andto pursue other business opportunities that have been identified recently

A final decision has yet to be made on the source offinancing for the Company or the amounts required for executing its businessplan. It is expected that either equity or debt financing, or a combination ofboth, will be needed to raise sufficient capital to advance the Company'sbusiness. 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 arebeneficial to the Company. 

Without locating additional financing, on favorable terms,the Company may be forced to scale back or halt the development of the variousbusinesses of its subsidiaries. In such event, it is unlikely the Company willcontinue to operate as a going concern. Holders of Company stock may be facedwith the inability to liquidate part or all of their investment on terms whichare financially profitable. Because an investment in Company stock is highlyspeculative, investors must be prepared to lose some or all of their investment.
**Item 3. Controls and Procedures**
As of June 30, 2007, we carried out an evaluation of theeffectiveness of our disclosure controls and procedures (as defined by Rule13a-14(c) under the Securities Exchange Act of 1934) under the supervision andwith the participation of our chief executive officer and chief financialofficer. Based on and as of the date of such evaluation, the aforementionedofficers have concluded that our disclosure controls and procedures areeffective for timely gathering, analyzing and disclosing the information we arerequired to disclose in our reports filed under the Securities Exchange Act of1934, as amended. There were no changes in our internal control over financialreporting (as defined in Rules 13a-15(F) and 15d-15(f) under the 1934 Act)during the period ended June 30, 2007, that have materially affected, or arereasonably likely to materially affect, our internal control over financialreporting.

 

PART II -- OTHER INFORMATION
** 

Item 5. Other information**
Board meetings:

1.    The Board of Directors, at a special meeting held in    Houston, Texas on May 12, 2007 unanimously approved the adoption of the    company's Bylaws recently revised and updated by the company's Legal Counsel    with immediate effect.

2. At a another special meeting held on May 24, 2007 in Houston, Texas,    the Board of Directors unanimously approved that the Company purchases four    unencumbered real properties from Hesperia Advisors Limited for $372,000 and    that full payment be made by issuing the seller 4,140,000 Convertible    Preferred shares ( one (1) preferred share to four (4) common shares ).
** 

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

31.2 Section 302 Certification Included

32.1 Section 906 Certification Included

32.2 Section 906 Certification Included

_______________________________________________________________________
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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized. 
**EMPYREAN HOLDINGS, INC.**
 

 

/s/ Robert L. Lee 

Robert L. Lee, 

President and Director Date: August 20, 2007

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