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 __June 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 June 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     THERE
WAS NOT TIME TO COMPLETE THE REVIEW OF THE 10-Q FOR June 30, 2008  . WE
WILL AMEND THE 10-Q ONCE THE AUDITOR HAS COMPLETED THEIR REVIEW  PART I  FINANCIAL INFORMATION Item
1. Financial Statements. Following
are the unaudited financial statements for the period ended June 30, 2008:  EMPYREAN
HOLDINGS, INC(A
Development Stage Company)CONSOLIDATED BALANCE SHEET(Unaudited)June 30, 2008
December 31, 2007CURRENT
ASSETSCash
$        8,076
$          1,969Prepaid
expenses
13,063
7,500Account
Receivable
1,495
1,495Emplyoee
Advance
9,000
-Contractor
Licencse Bonds
10,006
-Deposits
1,175
1,175Real
Estate Held For Sale
97,000
202,000Total
current assets
139,815
214,139Fixed
Assets, net of accumulated depreciation of $8,376, and $2,792
respectively
33,124
38,708TOTAL
ASSETS
$      172,939
$        252,847LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT
LIABILITIESAccounts
payable - trade
$      135,682
$        64,979Accrued
expenses

120,000Note
Payable - related parties
231,778
157,238Total
current liabilities
487,460
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;
10,258,066 shares issued and outstanding
12,008
10,258Additional
paid-in capital
1,815,734
1,791,234Accumulated
deficit during development stage
(2,157,403)
(1,786,002)Total
stockholders' deficit
(314,521)
30,630TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
$     172,939
$     252,847  The accompanying
notes are an integral part of these financial statements.       EMPYREAN HOLDING, INC(A  Development Stage company)CONSOLIDATED STATEMENTS OF INCOME &
EXPENSESThree Months Ended June 30, 2008 and 2007 and
theSix Months Ended June 30, 2008 and 2007 and
thePeriod from December 30, 2004 (Inception) through June 30,
2008(Unaudited)Three Months Ended June  30
Six Months Ended June  30Inception through June 30, 20082008
2007
2008
2007INCOMERental
Income
-



6,714Construction
Income
-

8,257

8,257Payroll
Processing and Other
-



16,564Sale
of real estate
45,000



978,200Total Income
45,000
-
102,257
-
1,009,735COST
AND EXPENSESCost
of real estate sold
43,096

117,193

1,133,146General
and administrative
111,919
98,386
202,125
118,804
1,374,315Compensation
Expense
146,250

146,250Impairment
of Note receivable - related party
-

-

162,148Loss
on abandonment of property held for sale
-

-

154,354Total Costs and Expenses
301,265
98,386
465,568
118,804
2,823,963OTHER
INCOME (EXPENSES)Interest
income (expense)
(5,321)
995
(8,090)
2,707
(81,445)Cost
of recapitalization
-



(115,479)-Total
other income (expenses)
(5,321)
995
(8,090)
2,707
(196,924)NET
LOSS
(261,586)
(97,391)
(371,401)
(116,097)
(2,157,402)-Deemed
dividend onpreferred stock issuance
-
373,200

373,200
373,200Net
loss attributable to common shareholders
(261,586)
(470,591)
(371,401)
(489,297)
(2,530,602)TOTAL
BASIC AND DILUTED NET LOSS PER SHARE
(0.03)
(0.05)
(0.04)
(0.05)BASIC
AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
10,287,167
9,858,066
10,316,333
9,858,066  The accompanying
notes are an integral part of these financial statements.         EMPYREAN
HOLDING, INC(A
 Development Stage company)CONSOLIDATED
STATEMENTS OF CASH FLOWSThree Months
Ended June 30, 2008 and 2007 and theSix Months
Ended June 30, 2008 and 2007 and thePeriod from
December 30, 2004 (Inception) through June 30, 2008(Unaudited)Six Months Ended Jun 30,
Inception Through Jun 30CASH
FLOWS FROM OPERATING ACTIVITIES
2008
2007
2008Net
income
(371,401)
(116,097)
(2,157,403)Adjustments
to reconcile net income to net cashused
for operating activities:Stock
issued for services
26,250

277,250Stock
based compensation
-

120,000Cost
of recapitalization
-

115,479Loss
on sale of property
-

43,977Loss
on abandoned
-

154,354Impairmentloss
on property


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


162,148Depreciation
expense
5,584

29,608Changes
in operating assets and liabilities:
.Other
assets

(9,050)
(8,674)Receivables


(1,495)Prepaid
expenses and Other current assets
(24,569)

(24,569)Land
held for sale
105,000

289,500Accounts
payable and accrued expenses
190,703
26,188
365,152CASH
USED FOR OPERATING ACTIVITIES
(68,433)
(98,959)
(623,173)CASH
FLOWS FROM INVESTING ACTIVITIESPayments
received on note receivable-related party

1,567
46,500Issuance
of note receivable


(208,648)proceeds
from sale of r/e
-

330,023Purchase
of fixed assets


(41,500)CASH
USED FOR INVESTING ACTIVITIES
-
1,567
126,375CASH
FLOWS FROM FINANCING ACTIVITIESProceeds
from issuance of Common stock


374,538Proceeds
from related party debt

7,644
345,381Borrowings
on related party debt
74,540
57,510
74,540Principal
payments on related party debt

(2,500)
(289,585)CASH
PROVIDED BY FINANCING ACTIVITIES
74,540
62,654
504,874NET
DECREASE IN CASH
6,107
(34,738)
8,076CASH
AT BEGINNING OF YEAR
1,969
35,443
0CASH
AT YEAR END
$   8,076
$    705
$   8,076SUPPLEMENTAL
DISCLOSURES:Cash
paid for interest
$       -
$       -
$   10,914Cash
paid for income taxes
$       -
$       -
$       -NON-CASH
INVESTING AND FINANCING ACTIVITIES:Shares
issued to settle related party debt
$       -
$       -
$    72,759Shares
issued for property
$       -
$       -
$ 1,517,200Forgiveness
of related party debt
$       -
$       -
$   226,334 The accompanying
notes are an integral part of these 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 $371,401 through the six months ended June 30, 2008, which increased the
accumulated deficit to $2,530,602 as of June 30, 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
$18,095 inclusive of accrued interest through June 30, 2008.  During the current period,
Empyrean received advances totaling $31,360 from a Director of the companys
wholly owned subsidiary, Empyrean Construction, Inc.  The loan bears
interest at 8% per annum and $17,200 has been repaid reducing the amount payable
to $45,038 as of June 30, 2008.  As no further advances have
been received from IMR, LLC during the period ending June 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 $3,800 as of June 30, 2008.        NOTE 4  SALE OF REAL
ESTATE.  As previously mentioned in the
1st Quarter 2008 report as a subsequent event , a lot owned by the
company in Kewaskum, Wisconsin was sold in early April 2008 for $45,000 and the
net proceeds of $41,903 received were used as working capital and for other
corporate activities.  NOTE 5-COMMON STOCK  On June 27,2008, the Company
has awarded 1,750,000 shares of common stock to its officer for past consulting
services. The shares are to be issued before August 2008              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 that will eventually provide competitive returns to
shareholders and investors. Due to the current difficult economic situation,
however, progress for this quarter has been slow. A brief report on the present
situation for the Companys subsidiaries follows.  Empyrean Properties, Inc. (Empyrean Properties):  In
April 2008 another lot in Kewaskum, Wisconsin was sold and the net proceeds of
$41,903 were used as working capital. The company now only owns one lot in Green
Bay, Wisconsin   with a carrying value of  $97,000. 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 has remained 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 will also remain a dormant subsidiary until funds are
obtained to reactive the PEO business for Empyrean Staffing.  Empyrean Construction, Inc., (Empyrean Construction)  Empyrean Construction holds general contractors licenses for the
States of California and Nevada. Though only a few small jobs have been
successfully completed to-date, the marketing strategies formulated to cater for
the difficult period being faced by the construction industry has recently
started to produce results.  The
unanticipated slow progress experienced in the 1st quarter of 2008
has made the reduction of one employee necessary. Two well qualified and
experienced employees, however, remain in employment and top priority is being
given to obtaining the financing needed to finalize agreements for the projects
recently identified.  The
objective of offering a majority interest in Empyrean Construction to an entity
that will contribute industry expertise, related services, goodwill and existing
development projects remains a possibility.   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. A
recent 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
June 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 June 30, 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 June 26, 2008
 acknowledged and recorded  that the sole officer and Director of the
company continues to provide his full time services without any compensation.
Compensation in the form of restricted shares and consulting fees was approved
but cash payments will only be due for payment when the company has obtained the
financing being pursued.  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:
August 19 , 2008