U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

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.

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(Exact name of registrant as specified in its charter)

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

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(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]

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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 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.

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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 does not appear that the Company will be able to continue 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, the Company shut down all operations of this subsidiary on October 24, 2008.  ,The Sacramento office was closed, and there is presently no intention to restart this business

Since the shutdown of Empyrean Construction, the Company has had no ongoing business activity. During December 2008, an investment agreement was finalized with Dutchess Private Equities Fund. Ltd. for the provision of an Equity Line of Credit for $10,000,000. 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.  A date for filing the registration statement will not be set until and unless all past due periodic reports are made current.  The company was removed from being listed on the OTC Bulletin Board on December 22, 2008.

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.  

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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.

(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.

Due to the 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 the term of the lease was 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  

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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 with the U.S. Department of Labor/OSHA and a reply refuting all his allegations was submitted in March 2009.  The Company disputes this claim and believes the claim lack merit.  A recent notice received from the Labor Department stated that the case is ongoing, but even an unfavorable outcome to the case is not expected to have a substantial detrimental affect on 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 five (5) quarterly installments.

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

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

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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.  

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

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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.

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

The Company 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 over the next 12 months will be approximately $5,000,000 for general overhead and the development of new business

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

Not required by smaller reporting companies.

ITEM 8.  FINANCIAL STATEMENTS

CONTRARY TO THE RULES OF THE SEC, THE COMPANY’S FINANCIAL STATEMENTS INCLUDED IN THIS FILING HAVE NOT BEEN AUDITEDD BY AN INDEPENDENT PUBLIC ACCOUNTANT IN ACCORDANCE WITH PROFESSIONAL STANDARDS FOR CONDUCTING SUCH REVIEWS.

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

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

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

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

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EMPYREAN HOLDINGS, INC.

 (A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - BASIS OF PRESENTATION

Nature of business: Empyrean Holdings, Inc. (“Empyrean”) 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.

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.

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.

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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 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

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) – an interpretation of FASB Statement No. 109, Accounting for Income Taxes (“SFAS No. 109”) (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS No. 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Guidance is also provided on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Empyrean adopted the provisions of FIN 48 in 2007 and no material uncertain tax positions were identified. Thus, the adoption of FIN 48 did not have an impact on Empyrean’s financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value under generally accepted accounting procedures and expands disclosures on fair value measurements. This statement applies under previously established valuation pronouncements and does not require the changing of any fair value measurements, though it may cause some valuation procedures to change. Under SFAS No. 157, fair value is established by the price that would be received to sell the item or the amount to be paid to transfer the liability of the asset as opposed to the price to be paid for the asset or received to transfer the liability. Further, it defines fair value as a market specific valuation as opposed to an entity specific valuation, though the statement does recognize that there may be instances when the low amount of market activity for a particular item or liability may challenge an entity’s ability to establish a market amount. In the instances that the item is restricted, this pronouncement states that the owner of the asset or liability should take into consideration what affects the restriction would have if viewed from the perspective of the buyer or assumer of the liability. This statement is effective for all assets valued in financial statements for fiscal years beginning after November 15, 2007. Empyrean is currently evaluating the impact of SFAS No. 157 on its financial position and result of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”), which provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal

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year beginning after November 15, 2007 with early adoption allowed. Empyrean has not yet determined the impact, if any, that adopting this standard might have on its financial statements.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Empyrean has incurred recurring net losses of $485,247 and $840,299 in 2008 and 2007, respectively, and an accumulated deficit of $2,271,249 as of December 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 ABANDONMENT OF REAL ESTATE INVESTMENT PROPERTY

As previously reported, the Key West condominium was lost through foreclosure action taken by Huck Finn, LLC, the Note holder and mortgagee.  As of the date of these financial statements, it is Empyrean’s understanding that the Key West Property has been put on the market for several months by Huck Finn, LLC but not yet sold. In connection with the Key West Property foreclosure, 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.  

Recent appraisals of the Key West Property indicate that it is valued between $468,900(in the case of a forced or liquidation sale) and $521,000 (in the case of other than forced or liquidation sale). It is therefore 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. 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.

NOTE 4 - INCOME TAXES

Deferred tax assets - NOLs

$ 772,225

Less: valuation allowance

 (772,225)

 --------

Net deferred taxes

$      -

 ========

Empyrean has net operating loss carry-forwards of approximately $2,271,249 at December 31, 2008, which begins expiring in 2025.

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+

NOTE 5 – SALE OF REAL ASSETS

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 obtained for the sale of these two lots were used as working capital.

As the proceeds received were less than the original carrying value of these assets, the company incurred a loss equal to the excess book value of $17,582.

NOTE 6 – PROPERTY & EQUIPMENT

Property and equipment are carried at cost and as of December 31, 2008, consists solely of furniture and fixtures, computer equipment and software. Depreciation is provided using the straight-line method for financial reporting purposes based on estimated useful lives as shown in the table below. Accumulated depreciation as of December 31, 2008 amounted to $11,168.

The cost of asset additions and improvements that extend the useful lives of property and equipment are capitalized. Routine maintenance and repair items are charged to current operations.

NOTE:

Due to the severe financial problems encountered it was not possible to keep up with lease payments for Empyrean Construction’s office at 817 14^th Street, Suite 200, Sacramento, California 95814 that was leased from Sterling Pacific Real Estate for $1,873 per month. When the business for this subsidiary was terminated on October 24, 2008, and this office closed the above property and equipment that were all in this office were handed over to the lessor that was owed 6 months rental or $11,241. This arrangement was verbally agreed with the lessor who has not invoiced Empyrean Construction for the unpaid rental.

NOTE 7 – 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.

For the year ended December 31, 2008 Empyrean’s Note payable due to IMR, LLC, which incurs interest at 8% per annum, has increased to $146,728. The Note payable due to a former real estate consultant who left the company’s service in late 2005 has, inclusive of 8% interest per annum ,increased to $52,038.

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During 2008, loans totaling $8,698 were made by an officer to the company.  These advances incur interest at a rate of 8% per annum.

NOTE 8 - 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 issue, of $26,250 which was expensed during the year.

NOTE 10 – RECLASSIFICATION

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

NOTE 11 – LEASES

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.

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.

NOTE 12- SUBSEQUENT EVENTS

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.

As part of the terms for finalizing an option and sale and purchase agreement 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, 2009, 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

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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 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.

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-

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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:  November 4,2009

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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