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 __March 31, 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 registrant 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 May 16, 2008, there were 10,258,066* shares of common stock issued and
outstanding Note:
* Includes 22,501 shares on hold and awaiting return from third party      PART I  FINANCIAL INFORMATION Item
1. Financial Statements. Following
are the unaudited financial statements for the period ended March 31, 2008:  EMPYREAN
HOLDINGS, INC(A
Development Stage Company)CONSOLIDATED BALANCE SHEET(Unaudited)March 31, 2008
December 31, 2007CURRENT
ASSETSCash
$8,394
$1,969Prepaid
expenses
6,836
7,500Account
Receivable
1,495
1,495Contractor
License Bonds
10,006
-Deposits
1,175
1,175Real
Estate Held For Sale
137,000
202,000Total
current assets
164,906
$
        214,139Fixed
Assets, net of accumulated depreciation of $5,584, and $2,792
respectively
35,916
38,708TOTAL
ASSETS
$200,822
$252,847LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT
LIABILITIESAccounts
payable - trade
$71,458
$64,979Note
Payable - related parties
208,548
157,238Total
current liabilities
280,006
222,217COMMITMENTS
AND CONTINGENCIES

-STOCKHOLDERS'
EQUITYPreferred
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;
10,258,066 shares issued and outstanding
10,258
10,258Additional
paid-in capital
1,791,234
1,791,234Accumulated
deficit during development stage
(1,895,816)
(1,786,002)Total
stockholders' equity (deficit)
(79,184)
30,630TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$200,822
$252,847  See accompanying
notes to unaudited financial statements.      EMPYREAN
HOLDING, INC
(A
 Development Stage company)
CONSOLIDATED
STATEMENTS OF INCOME & EXPENSES
Three Months
Ended March 31, 2008 and 2007 and the
Period from
December 30, 2004 (Inception) through March 31, 2008
(Unaudited)Three Months Ended March
31
Inception through
March 31,20082008
2007INCOMERental
Income
$
        -
$
         -
$6,714Construction
Income
8,257
-
8,257Payroll
Processing and Other
-
-
16,564Sale
of real estate
49,000
-
933,200Total Income
57,257
-
964,735COST
AND EXPENSESCost
of real estate sold
74,097

1,090,050General
and administrative
90,206
20,494
1,262,396Impairment
of Note receivable - related party
-
-
162,148Loss
on abandonment of property held for sale
-
-
154,354Total Costs and Expenses
164,303
20,494
2,668,948OTHER
INCOME (EXPENSES)Interest
income (expense)
(2,769)
1,712
(76,124)Cost
of recapitalization
-
-
(115,479)Total
other income (expenses)
(2,769)
1,712
(191,603)NET
LOSS
(109,815)
(18,782)
(1,895,816)Deemed
dividend on preferred stock issuance


373,200Net
loss attributable to common shareholders
$     (109,815)
$(18,782)
$(2,269,016)TOTAL
BASIC AND DILUTED NET LOSS PER SHARE
(0.01)
(0.00)BASIC
AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
10,258,066
9,858,066  See accompanying
notes to unaudited financial statements.       EMPYREAN
HOLDING, INC
(A
 Development Stage company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three Months
Ended March 31, 2008 and 2007 and the
Period from
December 30, 2004 (Inception) through March 31, 2008
(Unaudited)Three Months Ended March 31,
Inception Through March 31,CASH
FLOWS FROM OPERATING ACTIVITIES
2008
2007
2008Net
income
(109,815)
(18,782)
(1,895,816)Adjustments
to reconcile net income to net cashused
for operating activities:Stock
issued for services
-
-
251,000Stock
based compensation
-
-
120,000Cost
of recapitalization
-
-
115,479Loss
on sale of property
-
-
43,977Loss
on abandoned
-
-
154,35411,500Write
down of related party n/r and n/p
-
-
162,148Depreciation
expense
2,792
-
26,816Changes
in operating assets and liabilities:Receivables

-
(1,495)Prepaid
expenses and other current assets
(9,340)
(1,973)
(18,015)Land
held for sale
65,000
-
249,500Accounts
payable
6,478
(14,628)
180,927CASH
USED FOR OPERATING ACTIVITIES
(44,885)
(35,383)
(599,625)CASH
FLOWS FROM INVESTING ACTIVITIESPayments
received on note receivable-related
      party
-
-
46,500Issuance
of note receivable
-
-
(208,648)Proceeds
from sale of real estate
-
-
330,023Purchase
of fixed assets
-
-
(41,500)CASH
PROVIDED BY INVESTING ACTIVITIES
-
-
126,375CASH
FLOWS FROM FINANCING ACTIVITIESProceeds
from issuance of Common stock
-
-
374,538Proceeds
from related party debt
-
-
-Borrowings
on related party debt
71,310
2,500
416,691Principal
payments on related party debt
(20,000)
-
(309,585)CASH
PROVIDED BY FINANCING ACTIVITIES
51,310
2,500
481,644NET
INCREASE (DECREASE) IN CASH
6,425
(32,883)
8394CASH
AT BEGINNING OF PERIOD
1,969
35,443
-CASH
AT END OF PERIOD
$8,394
$2,560
$8,394  SUPPLEMENTAL
DISCLOSURES:Cash
paid for interest
$
       -
$
       -
$     10,914Cash
paid for income taxes
$
       -
$
       -
$
       -NON-CASH
INVESTING AND FINANCING ACTIVITIESShares
issued to settle related party debt
$
       -
$
$  72,759Shares
issued for property
$
$
$  1,517,200Forgiveness
of related party debt
$
       -
$
$    226,334  See accompanying
notes to unaudited financial statements.       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 $109,815 through the three months ended March 31, 2008, which increased the
accumulated deficit to $1,895,816 as of March 31, 2008. 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  - 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
$17,797 inclusive of accrued interest through March 31, 2008.  During the current period,
Empyrean received advances totaling $49,855 from a Director of the companys
wholly owned subsidiary, Empyrean Construction, Inc.  The loan bears
interest at 8% per annum and $20,000 has been repaid reducing the amount payable
to $29,855 as of March 31, 2008.  Advances that totaled $18,288
was also received from IMR, LLC during the period ending March 31, 2008
increasing the total outstanding amount due to IMR to $143,939, including
interest. This Note incurs interest at the rate of 8% per annum and is payable
on demand.  Advances made by an officer
total $16,957 as of March 31, 2008.  NOTE 4  SUBSEQUENT EVENT.  In early April 2008, a lot
owned by the company in Kewaskum, Wisconsin was sold for $45,000 and the net
proceeds of $41,903  received are being used as working capital and for
other corporate activities.      Item 2.  Management's Discussions and Analysis of
Financial Condition and Results of Operations.  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):  In
mid-March 2008 one of the three lots owned by the Company in Kewaskum, Wisconsin
was sold and the net proceeds of $45,033 received was used as working capital.
This subsidiary still owns another two lots in Kewaskum  and Green Bay
,Wisconsin which have a total carrying  value of $137,000. These real
assets are being held for sale to obtain more working capital  Empyrean Staffing, Inc. (Empyrean Staffing)  Due to
the unforeseen circumstances that developed soon after taking over the payroll
processing business from an affiliate during August 2007 these operations had to
be terminated to avoid losses.  Empyrean Staffing therefore ceased all
operations in December 2007 and can only be reactivated once the financing of
$1,000,000 required is obtained.  Empyrean Financial Services, Inc. (EFS)  With
the cessation of business for Empyrean Staffing, EFS will remain a dormant
subsidiary until funds are obtained to restart the PEO business. In the event
that this can be done then it is the intention to use EFS to provide financial
accounting and consulting services to the PEO Clients of Empyrean Staffing that
require these services.  Empyrean Construction, Inc., (Empyrean Construction)  Empyrean Construction has received its contractors licenses for
the States of California and Nevada. It now has three employees and every effort
is being made to obtain projects in both the Sacramento and Las Vegas areas.
Though  a few small jobs have been undertaken the subsidiary is still in
its development phase and far from breaking even and marketing strategies have
been revised to cater for the difficult period being faced by the construction
industry  The progress of this subsidiary is also dependent on the ability
to raise working capital to undertake larger projects during this period of
financial uncertainty.  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.  Subsequent event since March 31, 2008  In
April 2008 another lot in Kewaskum, Wisconsin was sold and the net proceeds of
$41,903 are being used as working capital. The company now only owns one more
lot that is located in Green Bay, Wisconsin  Liquidity  During
the next 12 months, significant working capital will be needed to fund Empyrean
Construction until it breaks even, to develop the businesses for the companys
other subsidiaries and to pursue other business opportunities.  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. 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
4.  Controls and Procedures  As of
March 31, 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 March 31, 2008, 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 February 8,
2008 unanimously approved the sale of the two lots in Kewaskum, Wisconsin to
obtain working capital. It was also approved that a Director with experience in
the construction industry may be appointed to the companys wholly owned
subsidiary, Empyrean Construction, Inc.     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:
May 20, 2008