U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

EMPYREAN HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

11200 Westheimer Rd., Suite 900, Houston, TX 77042

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number: (713) 243 8714

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Title of Class:

Common Stock

Title of Class:

Preferred

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes [  ]  No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     Yes [  ]  No [X]

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.      Yes [  ] No [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted

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pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such filed).

Yes  [  ]  No [X] (Not required by smaller reporting companies)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

Indicate by check mark whether the registrant is a shell company

Yes  [  ]     No  [X]

As of December 31, 2008, there were 12,008,066* shares of common stock issued and outstanding.  Of those, approx.2, 400,000 were held by non-affiliates of the Company.  The aggregate market value of the voting and non-voting common equity held by non-affiliates computed at $0.011 (the price at which the common stock traded as of June 30, 2009) is $26,400.00.

Note:

* Inclusive of 22,501 shares “on hold” and awaiting return by a third party.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

On November 4, 2009, the company filed its annual report for December 31, 2008, on Form 10-K, SEC file no. 00030118.  Contrary to the rules of the SEC, the Company’s financial statements included in the filing were not audited by an independent public accountant in accordance with professional standards for conducting such reviews.  The Company has since had its financial statements audited for the period ended December 31, 2008.  This amended Form 10K is being filed for the purpose of filing these audited financial statements and revising those sections of the 10K containing financial information and discussions.  

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                CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

         Certain statements in this annual report on Form 10-K contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to consummate a merger or business combination, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.  Readers should carefully review this annual report in its entirety, including but not limited to our financial statements and the notes thereto.  Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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PART I.

ITEM 1 BUSINESS

(a) Business Development and Objectives

Empyrean Holdings, Inc., a Nevada corporation (the "Company" or “Empyrean”), was originally organized on April 30, 1998 as Fuji International, Inc.; the name was changed on December 28, 1998 to Direction Technologies, Inc.  In March of 2001, Direction Technologies, Inc. merged with Empyrean Communications, Inc., and the name was changed to Empyrean Communications, Inc.

As approved at the Special shareholders’ meeting held on January 5, 2005, the Company’s name was changed to Empyrean Holdings, Inc. effective January 25, 2005. The new name was adopted to reflect the Company’s revised business plan to develop and expand as a holding company.

The mission is to develop Empyrean through selective diversification and acquisitions into a profitable multi-based holding company that will provide competitive return on investments.

However, the delay in obtaining funding coupled with the severe downturn in the economy resulted in major set backs in the development of the company’s wholly owned subsidiaries during the year.

Empyrean Staffing, Inc. remained dormant and there is no longer any possibility of resuscitating this business.

Minimal progress was made with Empyrean Construction, Inc. despite having obtained General Contractor’s licenses for the States of Nevada and California. Due to the inability to obtain project financing and the steep decline in the availability of work in the construction industry there was no alternative but to shut down all operations of this subsidiary on October 24, 2008 .As losses were running high the Sacramento office was closed and there is presently no intention to restart this business

Since the shutdown of Empyrean Construction, the company has no ongoing business but during December 2008 finalized an Investment agreement with Dutchess Private Equities Fund. Ltd. for the provision of an Equity Line of Credit for $10,000,000 (Ten million dollars) Dutchess has committed to purchase up to $10,000,000 of the company’s common stock over the course of 36 months

However, the company is obligated under the Registration Rights Agreement to file an S-1 registration with the SEC for sufficient shares of common stock and the company will only be able to access this line of credit after the SEC declares the registration statement effective.

As the lack of funds caused the company to be delinquent in its Q 2 and Q 3 10 Q filings the company was removed from being listed on the OTC Bulletin Board on December 22, 2008

Since that time the company only trades on the Other OTC or Pink sheets and every effort continues to be made to catch up on all its delayed 10 Q and 10 K filings to enable the company  to regain its  OTC Bulletin Board listing

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This delay in the company’s ability to access the Dutchess Equity Line of Credit will have a detrimental effect on the company’s development progress. Numerous possibilities are being pursued to obtain alternative financing but the depressed economic situation has made this a very difficult task,

.

The corporate office of the Company is located in an executive suite managed by a large national company, Corporate Office Centers, at 11200 Westheimer Rd., Suite 900, Houston Texas 77042.  Services for basic office requirements are also provided by Corporate Office Centers. The Company has a single full time officer located in this location

ITEM 1A.  RISK FACTORS

Not required by smaller reporting companies.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

(a)

Ownership

In March 2008 one of the three lots in Kewaskum, Wisconsin acquired in June 8, 2007 was sold for $49,000 and this yielded net proceeds of $45,033.In April 2008 another one of the remaining two lots was sold for $45,000 and net proceeds of $41,903 was obtained. The total net proceeds of $86,936 received for the sale of these two lots were used as working capital.

After these sales made during the year, the Company through its wholly owned subsidiary, Empyrean Properties, Inc., owns one remaining real property in Green Bay, Wisconsin with a carrying value of $97,000.  

(b) Office leases

 The current lease agreement with Corporate Office Centers is for two 160 square foot offices located at 11200 Westheimer Rd., Suite 900, Houston Texas, 77042. The term of the lease is month to month and basic rental is $1,580 per month. Extra costs averaging about $250 per month are incurred for other office services and facilities.

The term of the lease agreement with Corporate Office Centers for two 160 square foot offices located at 11200 Westheimer Rd., Suite 900, Houston Texas, 77042 was revised to one year on April 1, 2008 and the basic rental increased to $1,701.30 per month. Extra costs averaging about $250 per month are incurred for other office services and facilities.

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Due to need to reduce company expenses, this lease was modified to only one 160 square foot office for a basic rental of $805 per month on December 1, 2008 and term of the lease extended to December 31, 2009.

ECI’s branch office at Las Vegas located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89109 and leased on a month to month basis from Regus Business Centers for $400 per month was terminated in August 2008.

The ECI office at 817 14^th Street, Suite 200, Sacramento, California 95814 that was leased from Sterling Pacific Real Estate for $1,873.50 per month was terminated and the facilities shut down on October 24, 2008

ITEM 3.   LEGAL PROCEEDINGS  

1. The condominium located at 12 Coral Way, Key West, FL, and owned by the Company’s wholly owned subsidiary, Tradewinds International Corp. (Tradewinds) was lost through foreclosure action taken by the previous owner and mortgagee, Huck Finn LLC on December 20, 2005.  The full amount of the debt owed on the property is a debt of Tradewinds.  The debt was incurred by Tradewinds prior to the acquisition of Tradewinds stock by the Company and that debt has never been assumed by Empyrean Holdings.  Management believes that, although Tradewinds has no assets with which to pay the debt, that debt is not an obligation of Empyrean.  The Company recognized a loss of $139,000 on abandoned real estate investment.  At the time of the completion of this report, management believes that this property has yet to be resold by Huck Finn LLC.

2. An ex-employee of Empyrean Construction filed a complaint that was distributed to several agencies making unsubstantiated complaints against the company. The only inquiry to this complaint was received from the U.S. Department of Labor/OSHA and a reply refuting all his allegations was submitted in March 2009. A recent advice received from the Labor Department stated that the case is ongoing but even an unfavorable outcome to the case which is unlikely, is not expected to have a substantial detrimental affect to the company.

3. The same ex-employee also made a claim for unpaid wages to the US Department of Labor (Wage and Hour Division). A full settlement was obtained for the case by agreeing to pay him $15,604.00 in 5 (Five) quarterly installments as recommended by the Labor Department.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted for a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2008.

PART II.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Since the company was delisted from the OTC Bulletin Board it only trades on the Other OTC or Pink Sheets under the symbol EMPY

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The average high and low prices of the Company’s stock by quarters are given below:

For 2008

High                                    0.032                     0.029                 0.008             ________0.02____                          

Low__________________0.012__________0.017_______    0.015_______________0.008__

At the present time, there are no funds available for the payment of dividends. The Company also does not anticipate paying any dividends in the next twelve months.

Common Stock

The Articles of Incorporation currently authorize the issuance of 1,000,000,000 shares of common stock, with a par value of $0.001.  The holders of the Shares: (a) have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by the Board of Directors of the Company; (b) are entitled to share ratably in all of the assets of the Company available for distribution upon winding up of the affairs of the Company; (c) do not have preemptive subscription or conversion rights and there are no redemption or sinking fund applicable thereto; and (d) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of shareholders. These securities do not have any of the following rights: (a) cumulative or special voting rights; (b) preemptive rights to purchase in new issues of Shares; (c) preference as to dividends or interest; (d) preference upon liquidation; or (e) any other special rights or preferences.  In addition, the Shares are not convertible into any other security.  There are no restrictions on dividends under any loan other financing arrangements or otherwise.  See a copy of the Articles of Incorporation, and an amendment thereto, and Bylaws of the Company, attached as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3, respectively, to this Form 10-SB/A.  As of December 31, 2008, the Company had 12,008,066 shares (inclusive of 22,501 shares ‘on hold’ and awaiting return by a third party) of common stock outstanding.

Non-Cumulative Voting.

The holders of shares of Common Stock of the Company do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding Shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose.  In such event, the holders of the remaining Shares will not be able to elect any of the Company's directors.  

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Preferred Stock

The Preferred Stock holders have the right to convert one (1) preferred share to four (4) common shares at their discretion

The Company’s Articles of Incorporation, as amended, authorize 200,000,000 $.001 per share par value of Preferred Stock.  As of December 31, 2008, the Company had issued and outstanding 15,140,000 shares of Preferred Stock.  

Share Purchase Warrants

At December 31, 2008, no share purchase warrants were outstanding.

Dividends.

The Company does not currently intend to pay cash dividends.  The Company's proposed dividend policy is to make distributions of its revenues to its stockholders when the Company's Board of Directors deems such distributions appropriate.  Because the Company does not intend to make cash distributions, potential shareholders would need to sell their shares to realize a return on their investment.  There can be no assurances of the projected values of the neither shares, nor can there be any guarantees of the success of the Company. A distribution of revenues will be made only when, in the judgment of the Company's Board of Directors, it is in the best interest of the Company's stockholders to do so.  The Board of Directors will review, among other things, the investment quality and marketability of the securities considered for distribution; the impact of a distribution of securities on its customers, joint venture associates, management contracts, other investors, financial institutions, and the Company's internal management, plus the tax consequences and the market effects of an initial or broader distribution of such securities.

Transfer Agent.

The Company continues to retain the services of Pacific Stock Transfer Company, 500 E. Warm Springs Road, Suite 240, Las Vegas, NV 89119, to act as transfer agent and registrar.

Recent Sales of Unregistered Securities

 None

ITEM 6.  SELECTED FINANCIAL DATA

Not required by smaller reporting companies.

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following information specifies certain forward-looking statements of management of the Company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology such as, “may,” “shall,” “could,” “expect,” “estimate,” “anticipate,” “predict,” “probable,” “possible,” “should,” “continue,” or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been complied by our management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry and other circumstances.  As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. 

To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of these forward-looking statements.  No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

When compared to 2007, the company made better progress and managed to obtain modest revenues for its subsidiary, Empyrean Construction Inc. The operation of this start up business which had obtained General Contractor’s licenses for the States of California and Nevada was, however, short lived. As the severe economic downturn in early 2008 caused a sharp decline in the construction industry the operations of the subsidiary was terminated permanently in October 2008.

The Company therefore has no ongoing business or revenues of any kind and will require significant working capital for the next 12 months. A revised Business Plan is being prepared for the Company to raise funds through a private placement or the sale of shares through public registration. Management believes that its working capital requirements for 2009 will be approximately $5,000,000 for general overhead and the development of new business.

There is no assurance that the Company will be able to raise funds through private placements or obtain the necessary financing from other sources, hence, it is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. 

Liquidity and Capital Resources

As of December 31, 2008, the Company had assets equal to $108,029.  This compares with assets of $252,847 as of December 31, 2007.  The decrease was due mainly to the sale of property with book value of $105,000. The Company’s current liabilities as of December 31,

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2008, totaled $591,957, comprised of accounts payable, accrued expenses and note payable from related parties.  This compares with $222,217 as of December 31, 2007.  The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the year ended December 31, 2008, for the period from December 30, 2004 (Inception) to December 31, 2007, and for the cumulative period from December 30, 2004 (Inception) to December 31, 2008.

The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of developing new business. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

Results of Operations

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

We had revenues of $153,779 for the year ended December 31, 2008 compared to $542,064 for the prior year.  The decrease was due to mainly the lower sale prices for our properties. In 2008 when the real estate market  crashed, we sold a property for $94,000 as compared to 2007 where we were able to sell three properties for an aggregate price of $525,500.

For the year ended December 31, 2008, we had $540,808 net loss compared to a net loss of $840,299 in the prior year. The decrease in net loss was due to lower administrative expenses as the operation was in dormant status due to lack of funding and no impairment loss at December 31, 2008, as compared to $162,148 as at December 31, 2007.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.  

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required by smaller reporting companies.

ITEM 8.  FINANCIAL STATEMENTS

                                Table of Contents

Report of Independent Registered Public Accounting Firm ................. F-2

Balance Sheets as of December 31, 2008 and 2007  ........................ F-3

Statements of Operation for the years ended December 31, 2008 and 2007 and for the period from Inception (December 30, 2004) to December 31, 2008... F-4

Statements of Stockholders' Equity(Deficit) for the period from Inception

(December 30, 2004) to December 31, 2009 ................................ F-5

Statements of Cash Flows for the years ended December 31, 2008 and 2007, and for the Period from Inception (December 30, 2004) to December 31, 2008... F-6

Notes to Financial Statements ........................................... F-7

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Empyrean Holdings, Inc.

(A Development Stage Company)

Houston, Texas

We have audited the accompanying balance sheets of Empyrean Holdings, Inc. (a development stage company) as of December 31, 2008 and 2007 and the related statements of operation, stockholders' equity (deficit), and cash flows for the years then ended and for the period from inception (December 30, 2004) through December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Empyrean Holdings, Inc. as of December 31, 2008 and 2007 and the results of its operations and its cash flows for the years then ended and for the period from inception (December 30, 2004) through December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated significant revenue since its inception, has incurred losses in developing its business, and has a working capital deficiency. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

July 22, 2010

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The accompanying notes are an integral part of these consolidated financial statements

13

The accompanying notes are an integral part of these consolidated financial statements

14

The accompanying notes are an integral part of these consolidated financial statements

15

16

The accompanying notes are an integral part of these consolidated financial statements

17

EMPYREAN HOLDINGS, INC.

 (A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Period from inception (December 30, 2004) through December 31, 2008

NOTE 1 - BASIS OF PRESENTATION & SIGNIFICANT ACCOUNTING POLLICIES

Nature of business: Empyrean Holdings, Inc. was incorporated in Nevada on December 30, 2004.  Empyrean is a development stage entity whose activities to date have included business planning, capital raising activities and limited purchases and sales of real estate.

The delay in obtaining funding exacerbated by the severe downturn in the economy resulted in little progress being made in the development of the company’s wholly owned subsidiaries during the year. Empyrean Staffing, Inc. remained dormant and minimal progress was made with Empyrean Construction, Inc. despite having obtained General Contractor’s licenses for the States of Nevada and California. Due to the inability to obtain project financing and the severe downturn in the construction industry a decision was taken to shut down all operations of this subsidiary on October 24, 2008. The Sacramento office was closed and with little indication available on the time period necessary for a substantial recovery in the construction industry, there is presently no intention to restart this business.

Certain amounts from 2007 have been reclassified to agree with 2008 classifications.

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.

Principles of Consolidation:  The accompanying financial statements include the accounts of Empyrean and its wholly owned subsidiaries, Tradewinds International Corporation, Empyrean Properties, Inc., Empyrean Construction, Inc. and Empyrean Staffing, Inc. All significant inter-company balances and transactions with consolidated subsidiaries have been eliminated in consolidation.

Cash and Cash Equivalents. For purposes of the statements of cash flow, Empyrean considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Property and Equipment. Property and equipment is stated at cost, net of accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years. Land held for sale is not depreciated.

Revenue Recognition: Revenue is recognized when persuasive evidence of an arrangement exists, service has been rendered, the sales price is fixed or determinable, and collectability is reasonably assured.

Income Taxes: Empyrean recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. Empyrean provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

Share-Based Compensation: Empyrean accounts for stock-based compensation issued to employees and non-employees as required by SFAS No. 123 (R), "Accounting for Stock Based Compensation." Under

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these provisions, Empyrean records expense over the related service period based on the fair value of the awards at the date of grant.

Earnings Per Share: The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2008 and 2007, there were no dilutive securities outstanding.

Recent Accounting Pronouncements:  The Company does not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results, of operations or cash flows.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Empyrean has incurred net losses since inception and has a negative working capital. 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 - INCOME TAXES

December 31, 2008

December 31, 2007

Deferred tax assets - NOLs

$

    791,115

$607,000

Less: valuation allowance

   (791,115)

(607,000)

      --------

________________

Net deferred taxes

$      

-

 $                     -

 ========

========

Empyrean has net operating loss carry-forwards of $2,326,810 at December 31, 2008, which begin expiring in 2025.

NOTE 4 – SALE OF REAL ASSETS

In March 2008, one of the three lots in Kewaskum, Wisconsin acquired in June 2007 was sold for $49,000 and this yielded net proceeds of $45,033.  In April 2008 another one of the remaining two lots was sold for $45,000 with net proceeds of $41,903.

As the proceeds received were less than the original carrying value of these assets, the company incurred a loss of $13,480.

NOTE 5 – PROPERTY & EQUIPMENT

Due to the severe financial problems encountered it was not possible to keep up with lease payments for Empyrean Construction’s office in Sacramento, California. When the business for this subsidiary was terminated on October 24, 2008 and this office closed, our property and equipment were handed over to the lessor that was owed 6 months rental of $11,241. Net book value was $27,543 which was used to the settle the outstanding lease payable of $11,241. For 2008, the company recorded a loss of 16,302.

As of December 31, 2007, property and equipment were as follows:

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NOTE 6 – NOTES RECEIVABLE AND PAYABLE - RELATED PARTY

The IMR, LLC Note receivable of $161,648 was impaired at December 31, 2007 due to this company filing for bankruptcy. For the year ended December 31, 2008 there has been no contact of any kind from the bankruptcy court or the Trustee.

During 2007, Empyrean received advances from IMR, LLC of $216,385 and repaid $98,000, resulting in a note payable balance of $118,385. This note payable incurs interest at 8% per annum. As of December 31, 2008 Empyrean’s Note payable due to IMR, LLC of $132,578, which includes $14,193 of  interest.

Advances made by Tom Bojadzijev before his termination as a real estate consultant for Empyrean continues to accrue interest at 8 % per annum. The amount of this note is $17,493 inclusive of accrued interest through December 31, 2007. As of December 31, 2008 the note increased to $18,713 due to additional accrued interest. The note is due on demand.

During 2007, loans totaling $16,000 were made by an officer to the company. These advances incur interest at a rate of 8% per annum. During 2008, loans totaling $143,207 were made by officers to the company. The company repaid $66,500 during the year.  These advances incur interest at a rate of 8% per annum and are due on demand.

NOTE 7 - COMPENSATION FOR OFFICERS

For 2008, no remuneration in the form of consulting fees and/or allowances was paid. However, 1,750,000 shares of common stock were awarded to an officer on August 20, 2008 for consulting services rendered. These shares had a value, based upon the market price at the date of grant, of $26,250 which was expensed during the year.

For the extensive development work provided by the two officers a total of $199,500 was paid as consulting fees during the year. One officer, however,  resigned his position as Director and CFO in November 2007 and a replacement has yet to be obtained. The remaining officer was issued 400,000 restricted shares vesting immediately in December 2007 as compensation for dealing with the extra work load. These shares had a value, based upon the market price at date of grant, of $8,000, which was expensed during 2007.  

NOTE 8 – REAL ESTATE HELD FOR SALE

As of December 31, 2008 and 2007, the company recorded $97,000 and $202,000 of real estate held for sale. These real estate properties were presented to reflect the lower of cost or the fair value less cost to sell on the accompanying balance sheets.

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NOTE 9 – COMMITMENTS AND CONTINGENCIES

The term of the lease agreement with Corporate Office Centers for two 160 square foot offices located at 11200 Westheimer Rd., Suite 900, Houston Texas, 77042 was revised to one year on April 1, 2008 and the basic rental increased to $1,701 per month. Extra costs averaging about $250 per month are incurred for other office services and facilities.

Due to need to reduce company expenses, this lease was modified to only one 160 square foot office for a basic rental of $805 per month on December 1, 2008 and term of the lease extended to June 30, 2009.

ECI’s branch office at Las Vegas located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89109 and leased on a month to month basis from Regus Business Centers for $400 per month was closed in August 2008 due to the severe downturn in business for the construction industry.

During 2007, the Key West condominium was lost through foreclosure action taken by Huck Finn, LLC, the note holder.  Empyrean has removed both the Key West Property and Senior Secured Note (including related default accruals) from its books and has recognized a loss on abandoned real estate investment property of $139,095.  It is management’s belief that, once sold, the proceeds realized from the sale of the Key West Property should be sufficient to settle the amount due under the foreclosure judgment of $617,000. In the event that the proceeds from the ultimate sale are not sufficient to cover the amount due under the foreclosure judgment, Empyrean may be responsible for making up the shortfall. As of December 31, 2008, Huck Finn, LLC has yet sold the property. In addition, management has determined that the probability of additional loss associated with the Key West Condominium is remote. Thus, no additional accrual was recorded as of December 31, 2008 and 2007.

NOTE 10- SUBSEQUENT EVENTS

In December 2008, the company entered into an agreement with a private equity to invest up to $10 million to purchase the company’s stock. As of July 2010, there has been no activities related to this agreement.

On March 2, 2009, an ex-employee made a claim for unpaid wages to the US Department of Labor (Wage and Hour Division). A full settlement was obtained for the case by agreeing to pay him $15,604.00 in 5 (Five) quarterly installments as recommended by the Labor Department.

In June 2009, the company resolved to pledge its real estate property to obtain a mortgage loan of $36,500. The loan was subsequently paid off as the company sold its real estate property.

During July 2009, 5,200,000 restricted common shares were sold through a Private Placement to an investor. A warrant that expires on July 12, 2010  for the  purchase of a further  5,200,000 shares were also issued to this investor.

In July 2009, an option for purchase agreement is finalized with the owner of real property in Santa Barbara, California, 5,000,000 restricted common shares were issued. The company has the right to purchase these shares for $50,000 no later than 6 months from the date of issue.

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ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES  

Evaluation of Our Disclosure Controls

Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report (the “Evaluation Date”).  Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

With the participation of our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2008, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2008, based on the COSO framework criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive and Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide

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absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2008, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The names, ages, and respective positions of the directors, officers, and significant employees of the Company are set forth below.  Mr. Lee has held his positions since March 2001 and there are no other person(s) who can be classified as a promoter or controlling person of the Company.

Mr. Robert L. Lee, Director, President and CEO, Secretary and Treasurer   Age 66

Mr. Lee obtained his financial management experience from Price Waterhouse and Associates (UK) and also studied consulting methods and systems with the International Society of Organizational Development (US)

He was involved in the plantation industry in Malaysia, Indonesia and Thailand for over 30 years. He served as Senior Advisor and Director of the management company of one of the largest publicly traded plantation groups before he migrated to the US.

He has been registered as a consultant for finance and management of tropical tree crops with the World Bank and has served as an Independent consultant for business development projects in the Ivory Coast, Senegal, the Bahamas, Belize, Mexico, Panama and Pakistan.

Code of Ethics

The Company intends to adopt a Code of Business Conduct and Ethics (“Code”) applicable to its officers, directors, and employees, which includes the principal executive officer and the principal financial officer The purpose of the Code will be to provide legal and ethical standards to deter wrongdoing and to promote:

               (a)  Honest and ethical conduct;

               (b) Full, fair, accurate, timely and understandable disclosures

               (c)Compliance with laws, rules, and regulations;

               (d) Prompt internal reporting of violations of the Code; and

                (e)  Accountability for adherence to the Code.

ITEM 11.  EXECUTIVE COMPENSATION.

For 2008 no remuneration in the form of consulting fees and/or allowances was paid. However, 1,750,000 shares of common stock were awarded to an officer on August 20, 2008 for consulting services rendered. These shares had a value, based upon the market price at the date of issue, of $17,500 which was expensed during the year.

 There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the corporation or any of its subsidiaries.

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of the date of this annual report, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares.

(1)

The percent of class is based on 12,008,066 shares of common stock issued and outstanding as of December 31, 2008.

(2)

As used herein, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, including a right to acquire such power(s) during the next 60 days.  Unless otherwise noted, beneficial ownership consists of sole ownership, voting and investment rights.

Securities Authorized for Issuance Under Equity Compensation Plans

We have not adopted any equity compensation plans since our inception.

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.  INCLUDE LIST OF DIRECTORS, COMMITTEES ON WHICH THEY SERVE AND IF THEY ARE INDEPENDENT DIRECTORS-

Other than as set forth in Item 7, there are no relationships, transactions, or proposed transactions to which the registrant was or is to be a party, in which any of the named persons set forth in Item 404 of Regulation SB had or is to have a direct or indirect material interest.

 ITEM14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

1.

Audit Fees:

Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-QSB:  

2007:

$31,380

2008:

$5,750

2.

Audit-Related Fees:

Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously.

2007:

$0

2008:

$0

3.

Tax Fees:

Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

2007:

$0

2008:

$0

4.

All Other Fees:

Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.

2007:

$0

2008:

$0

5.

Audit Committee Pre-Approval Procedures.  The Board of Directors has not, to date, appointed an Audit Committee.

PART IV

ITEM 15.  EXHIBITS

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 CEO

Date:  July 26, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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