FORM 10-QSB
         EARTHBLOCK TECHNOLOGIES,
        INC.
   NEVADA
   65-0729440
   2637 Erie Avenue,
        Suite
        207 , Cincinnati , OH
        45208
   (513)533-1220
          -1-
 EARTHBLOCK TECHNOLOGIES,
        INC.
  FORM 10-QSB
   PART I-- FINANCIAL INFORMATION
              3Item 1-- Financial
                  Statements
              3Item 2-- Management's
                  Discussion and Analysis or Plan of Operation
              15Item 3-- Controls and
                  Procedures
              22PART II-- OTHER INFORMATION
              23Item 2-- Changes in Securities
                  and Use of Proceeds
              23Item 6-- Exhibits and Reports
                  on Form 8-K
              23SIGNATURES
              24
  -2-
 Part I - Financial Information
  
 Pollard-Kelley Auditing
        Services, Inc *Auditing Services**3250 West Market St,
        Suite 307, Fairlawn, OH 44333 330-836-2558*
 
 Report of Independent
        Certified
        Public Accountants
  Board
          of
          Directors
 EarthBlock
          Technology, Inc. and Subsidiary
 
 We
          have
          reviewed the accompanying consolidated balance sheets of EarthBlock Technology,
          Inc. and Subsidiary as of September 30, 2006 and the related consolidated
          statements of income, stockholders’ equity, and cash flows for the three-month
          and nine-month periods then ended. These interim financial statements are
          the
          responsibility of the Company’s management.
 
 We
          conducted our review in accordance with the standards of the Public Company
          Accounting Oversight Board. A review of interim financial statements consists
          principally of applying analytical procedures and making inquiries of persons
          responsible for financial and accounting matters. It is substantially less
          in
          scope than an audit in accordance with the standards of the Public Company
          Accounting Oversight Board, the object of which is the expression of an
          opinion
          regarding the financial statements taken as a whole. Accordingly, we do
          not
          express such an opinion.
 
 The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in notes to the financial
          statements, the Company has negative working capital, negative cash flows
          from
          operations and recurring operating losses which raises substantial doubt
          about
          its ability to continue as a going concern. Management’s plans in regard to
          these matters are also described in the notes to the financial statements.
          These
          financial statements do not include any adjustments that might result from
          the
          outcome of this uncertainty.
 
 Based
          on
          our review, we are not aware of any material modifications that should
          be made
          to the accompanying financial statements in order for them to be in conformity
          with generally accepted accounting principles accepted in the United States
          of
          America.
 
 Pollard-Kelley
          Auditing Services, Inc.
 
 /S/
          Pollard-Kelley Auditing Services, Inc.
 November
          20, 2006
 Fairlawn,
          Ohio
 -3-
 **EarthBlock Technologies, Inc and Subsidiary**(A Development Stage Company)CONSOLIDATED BALANCE SHEETSeptember 30, 2006 and 2005
  **2006**
                
                **2005**ASSETSCurrent
                    AssetsCash
                    and cash equivalents
                
                
                
                
                $
                -
                
                $
                19,273Inventory
                
                
                
                
                
                180,000
                
                
                -Prepaid
                    expenses
                
                
                
                
                
                -
                
                
                -Total
                    Current Assets
                
                
                
                
                
                180,000
                
                
                19,273Fixed
                    AssetsComputers
                
                
                
                
                
                9,402
                
                
                9,402Less:
                    Accumulated depreciation
                
                
                
                
                
                (5,921
                )
                
                (2,428
                )3,481
                
                
                6,974Total
                    Assets
                
                
                
                
                $
                183,481
                
                $
                26,247LIABILITIES
                    AND STOCKHOLDERS' EQUITYCurrent
                    LiabilitiesBank
                    overdrafts
                
                
                
                
                $
                31,909
                
                $
                -Notes
                    payable
                
                
                
                
                
                236,000
                
                
                260,000Accounts
                    payable
                
                
                
                
                
                158,313
                
                
                102,948Accrued
                    salaries
                
                
                
                
                
                603,432
                
                
                673,560Accrued
                    payroll taxes
                
                
                
                
                
                12,644
                
                
                -Accrued
                    interest
                
                
                
                
                
                114,025
                
                
                80,849Total
                    Current Liabilities
                
                
                
                
                
                1,156,323
                
                
                1,117,357Other
                    LiabilitiesNotes
                    payable
                
                
                
                
                
                206,500
                
                
                -Derivative
                    liability
                
                
                
                
                
                -
                
                
                -Stockholders'
                    EquityPreferred
                    stock
                
                
                
                
                
                -
                
                
                -Common
                    stock
                
                
                
                
                
                88,465
                
                
                49,815Warrants
                
                
                
                
                
                -
                
                
                -Additional
                    contributed capital
                
                
                
                
                
                1,662,358
                
                
                380,008Deficit
                    accumulated during thedevelopment
                    stage
                
                
                
                
                
                (2,930,165
                )
                
                (1,520,933
                )Accumulated
                    other comprehensive income
                
                
                
                
                
                -Subscriptions
                    receivable
                
                
                
                
                
                -
                
                
                -(1,179,342
                )
                
                (1,091,110
                )Total
                    Liabilities and Stockholders' Equity
                
                
                
                
                $
                183,481
                
                $
                26,247See
                    accompanying notes to financial
                    statements.
  -4-
 **EarthBlock Technologies, Inc and Subsidiary**(A Development Stage Company)CONSOLIDATED STATEMENT OF OPERATIONSFor
                    the Quarters and Year to Date Ending September 30, 2006 and 2005,
                    and the
                    Period beginning
                    May, 2002 (Inception) through to September 30,
                    2006
 
 **Quarter**
                
                **Quarter**
                
                **Year
                    to**
                
                **Year
                    to****Ending**
                
                **Ending**
                
                **Date**
                
                **Date**
                
                **Since****2006**
                
                **2005**
                
                **2006**
                
                **2005**
                
                **Inception**Revenues
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                27,000
                
                $
                52,000Cost
                    of SalesDirect
                    cost of sales
                
                
                112,498
                
                
                8,525
                
                
                112,498
                
                
                20,557
                
                
                136,555Gross
                    Profit
                
                
                (112,498
                )
                
                (8,525
                )
                
                (112,498
                )
                
                6,443
                
                
                (84,555
                )ExpensesOffice
                
                
                6,946
                
                
                2,416
                
                
                11,328
                
                
                11,609
                
                
                74,744Amortization
                
                
                50,311
                
                
                -
                
                
                95,539
                
                
                -
                
                
                50,311Depreciation
                
                
                1,084
                
                
                506
                
                
                3,252
                
                
                1,518
                
                
                4,837Interest
                
                
                8,450
                
                
                7,074
                
                
                367,350
                
                
                19,974
                
                
                106,539Licensor
                    expenses
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                81,528Professional
                    fees
                
                
                4,123
                
                
                5,005
                
                
                102,329
                
                
                36,305
                
                
                278,419Rent
                
                
                2,768
                
                
                4,876
                
                
                11,843
                
                
                10,815
                
                
                36,745Salaries
                
                
                297,691
                
                
                -
                
                
                720,859
                
                
                128,420
                
                
                1,239,631Travel
                
                
                9,651
                
                
                3,606
                
                
                18,286
                
                
                19,736
                
                
                77,304381,024
                
                
                23,483
                
                
                1,330,786
                
                
                228,377
                
                
                1,950,058Net
                    Loss
                
                
                (493,522
                )
                $
                (32,008
                )
                
                (1,443,284
                )
                $
                (221,934
                )
                
                (2,034,613
                )Other
                    Comprehensive IncomeDecrease
                    in fair value of derivatives
                
                
                26,095
                
                
                
                
                
                95,539
                
                
                
                
                
                95,539Net
                    Comprehensive Income
                
                $
                (467,427
                )
                
                
                
                $
                (1,347,745
                )
                
                
                
                $
                (1,939,074
                )Net
                    Loss Per Share
                
                $
                (0.01
                )
                
                
                
                $
                (0.02
                )Net
                    Comprehensive Loss Per Share
                
                $
                (0.01
                )
                
                
                
                $
                (0.02
                )Weighted
                    average shares outstanding
                
                
                81,909,462
                
                
                
                
                
                65,025,944See
                    accompanying notes to financial
                    statements.
  -5-
 **EarthBlock Technologies, Inc and Subsidiary**(A Development Stage Company)CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITYSince Inception through September 30, 2006
  **Deficit****Accumulated****Additional**
                
                **During
                    the**
                
                **Accumulated
                    Other**
                
                **Stock****Preferred
                    Stock**
                
                
                
                **Common
                    Stock**
                
                
                
                
                
                **Contributed**
                
                **Development**
                
                **Comprehensive**
                
                **Subscription****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Warrants**
                
                **Capital**
                
                **Stage**
                
                **Income**
                
                **Receivable**
                
                **Total**May,
                    2002 Inception
                
                
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -Original
                    issue for cashand
                    services
                
                
                -
                
                
                -
                
                
                10,505,000
                
                
                8,001
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                8,001Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Balance
                    December 31, 2002
                
                
                -
                
                
                -
                
                
                10,505,000
                
                
                8,001
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                8,001Merger
                    with LL BrownInternational
                    Inc.
                
                
                -
                
                
                -
                
                
                (504,982
                )
                
                1,999
                
                
                -
                
                
                3,808
                
                
                (154,243
                )
                
                -
                
                
                -
                
                
                (148,436
                )Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                12,000,000
                
                
                12,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                12,000Shares
                    issued for interest
                
                
                -
                
                
                -
                
                
                965,000
                
                
                965
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                965Dividends
                    paid
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,000
                )
                
                -
                
                
                -
                
                
                (1,000
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (515,013
                )
                
                -
                
                
                -
                
                
                (515,013
                )Balance
                    December 31, 2003
                
                
                -
                
                
                -
                
                
                22,965,018
                
                
                22,965
                
                
                -
                
                
                3,808
                
                
                (670,256
                )
                
                -
                
                
                -
                
                
                (643,483
                )Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                3,050,000
                
                
                3,050
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,050Share
                    sales
                
                
                -
                
                
                -
                
                
                14,800,000
                
                
                14,800
                
                
                -
                
                
                375,200
                
                
                -
                
                
                -
                
                
                (75,000
                )
                
                315,000Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (628,743
                )
                
                -
                
                
                -
                
                
                (628,743
                )Balance
                    December 31, 2004
                
                
                -
                
                
                -
                
                
                40,815,018
                
                
                40,815
                
                
                -
                
                
                379,008
                
                
                (1,298,999
                )
                
                -
                
                
                (75,000
                )
                
                (954,176
                )Collection
                    of stocksubscription
                    receivable
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                72,500
                
                
                72,500Share
                    sales
                
                
                -
                
                
                -
                
                
                4,000,000
                
                
                4,000
                
                
                -
                
                
                6,000
                
                
                -
                
                
                -
                
                
                -
                
                
                10,000Collection
                    of stocksubscription
                    receivable
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,500
                
                
                2,500Correction
                    of 2004 sharesales
                
                
                -
                
                
                -
                
                
                5,000,000
                
                
                5,000
                
                
                -
                
                
                (5,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (283,421
                )
                
                -
                
                
                -
                
                
                (283,421
                )Balance
                    December 31, 2005
                
                
                -
                
                
                -
                
                
                49,815,018
                
                
                49,815
                
                
                -
                
                
                380,008
                
                
                (1,582,420
                )
                
                -
                
                
                -
                
                
                (1,152,597
                )Share
                    sales
                
                
                -
                
                
                -
                
                
                7,000,000
                
                
                7,000
                
                
                -
                
                
                28,000
                
                
                -
                
                
                -
                
                
                -
                
                
                35,000Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                2,500,000
                
                
                2,500
                
                
                -
                
                
                85,000
                
                
                -
                
                
                -
                
                
                -
                
                
                87,500Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (113,914
                )
                
                -
                
                
                -
                
                
                (113,914
                )Balance
                    March 31, 2006
                
                
                -
                
                
                -
                
                
                59,315,018
                
                
                59,315
                
                
                -
                
                
                493,008
                
                
                (1,696,334
                )
                
                -
                
                
                -
                
                
                (1,144,011
                )Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                5,750,000
                
                
                5,750
                
                
                -
                
                
                451,750
                
                
                -
                
                
                -
                
                
                -
                
                
                457,500Shares
                    issued inconnect
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -with
                    certain Notes payable
                
                
                -
                
                
                -
                
                
                11,400,000
                
                
                11,400
                
                
                -
                
                
                330,600
                
                
                -
                
                
                -
                
                
                -
                
                
                342,000Sale
                    of warrants
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                52,500
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                52,500Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (835,848
                )
                
                
                
                
                
                
                
                (835,848
                )Net
                    Other Comprehensive
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                69,444
                
                
                -
                
                
                69,444Balance
                    June 30, 2006
                
                
                -
                
                
                -
                
                
                76,465,018
                
                
                76,465
                
                
                52,500
                
                
                1,275,358
                
                
                (2,532,182
                )
                
                69,444
                
                
                -
                
                
                (1,058,415
                )Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                12,000,000
                
                
                12,000
                
                
                -
                
                
                267,000
                
                
                -
                
                
                -
                
                
                -
                
                
                279,000Sales
                    of warrants
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                67,500
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                67,500Net
                    Loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (493,522
                )
                
                -
                
                
                -
                
                
                (493,522
                )Net
                    Other ComprehensiveIncome
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                26,095
                
                
                -
                
                
                26,095Issue
                    of Series A Preferred
                
                
                2
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Close
                    out Net Other
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Comprehensive
                    Income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                95,539
                
                
                (95,539
                )
                
                -
                
                
                -Close
                    out Warrants
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (120,000
                )
                
                120,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -Balance
                    September 30, 2006
                
                
                2
                
                $
                -
                
                
                88,465,018
                
                $
                88,465
                
                $
                -
                
                $
                1,662,358
                
                $
                (2,930,165
                )
                $
                -
                
                $
                -
                
                $
                (1,179,342
                )See
                    accompanying notes to financial statements.
 -6-
 **EarthBlock Technologies, Inc and Subsidiary**(A Development Stage Company)CONSOLIDATED STATEMENT OF CASH FLOWSFor
                    the Quarters and Year to Date Ending September 30, 2006 and 2005,
                    and the
                    Period beginning
                    May, 2002 (Inception) through to September 30,
                    2006
  **Quarter**
                
                **Quarter**
                
                **Year
                    to**
                
                **Year
                    to****Ending**
                
                **Ending**
                
                **Date**
                
                **Date**
                
                **Since****2006**
                
                **2005**
                
                **2006**
                
                **2005**
                
                **Inception**Cash
                    Flows from Operating ActivitiesNet
                    Loss
                
                $
                (493,522
                )
                $
                (32,008
                )
                $
                (1,443,284
                )
                $
                (221,934
                )
                $
                (2,870,461
                )Adjustments
                    to reconcile net loss to netcash
                    provided by operating activitiesDepreciation
                    and amortization
                
                
                51,394
                
                
                506
                
                
                98,791
                
                
                1,518
                
                
                101,460Stock
                    for services
                
                
                279,000
                
                
                -
                
                
                824,000
                
                
                -
                
                
                839,050Stock
                    for Debt call relief
                
                
                -
                
                
                
                
                
                342,000
                
                
                
                
                
                342,000Stock
                    for interest
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                965Decrease
                    in Start Up Costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                33,408(Increase)
                    in Inventory
                
                
                (103,242
                )
                
                
                
                
                (180,000
                )
                
                -
                
                
                (180,000
                )Increase
                    in Accounts payable
                
                
                36,724
                
                
                (1,405
                )
                
                55,405
                
                
                538
                
                
                58,877Increase
                    in Accrued salaries
                
                
                (20,508
                )
                
                (13,500
                )
                
                (100,008
                )
                
                76,120
                
                
                603,432Increase
                    in Accrued payroll taxes
                
                
                831
                
                
                -
                
                
                12,644
                
                
                -
                
                
                12,644Increase
                    in Accrued interest
                
                
                8,450
                
                
                7,074
                
                
                25,350
                
                
                19,974
                
                
                114,025Net
                    Cash (Used) by Operating Activities
                
                
                (240,873
                )
                
                (39,333
                )
                
                (365,102
                )
                
                (123,784
                )
                
                (944,600
                )Cash
                    Flows from Investing ActivitiesIncrease
                    in Start Up Costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (33,408
                )Purchase
                    of fixed assets
                
                
                -
                
                
                -
                
                
                -
                
                
                (303
                )
                
                (9,402
                )Subscriptions
                    receivable
                
                
                -
                
                
                -
                
                
                -
                
                
                75,000
                
                
                -Net
                    Cash (Used) by Investing Activities
                
                
                -
                
                
                -
                
                
                -
                
                
                74,697
                
                
                (42,810
                )Cash
                    Flows from Financing ActivitiesIncrease
                    in Notes payable
                
                
                158,500
                
                
                50,000
                
                
                182,500
                
                
                50,000
                
                
                442,500Funds
                    paid for Merger shell
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (49,000
                )Sale
                    of Warrants
                
                
                67,500
                
                
                
                
                
                120,000
                
                
                
                
                
                120,000Dividend
                    paid
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,000
                )Sale
                    of Common stock
                
                
                -
                
                
                -
                
                
                35,000
                
                
                10,000
                
                
                443,001Cash
                    Flows Provided by Financing Activities
                
                
                226,000
                
                
                50,000
                
                
                337,500
                
                
                60,000
                
                
                955,501Net
                    Increase in Cash and Cash Equivalents
                
                
                (14,873
                )
                
                10,667
                
                
                (27,602
                )
                
                10,913
                
                
                (31,909
                )Cash
                    and Cash Equivalents - Beginning
                
                
                (17,036
                )
                
                8,606
                
                
                (4,307
                )
                
                8,360
                
                
                -Cash
                    and Cash Equivalents - Ending
                
                $
                (31,909
                )
                $
                19,273
                
                $
                (31,909
                )
                $
                19,273
                
                $
                (31,909
                )See
                    accompanying notes to financial
                    statements.
  -7-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          1
          - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 History:
 
 The
          Company is a Nevada corporation incorporated on February 19, 1997, and
          is a
          reporting company with the Securities and Exchange Commission. It changed
          its
          name from L.L. Brown International, Inc. to Terra Block International Inc.
          on
          February 19, 2003.
 
 On
          February 14, 2003 the Company entered into a Share Exchange Agreement with
          Terra
          Block Consolidated, Inc. The agreement provides for 100% of the shares
          of Terra
          Block Consolidated, Inc. to be acquired by the Company in exchange for
          shares of
          common stock of the Company, with the total issued and outstanding shares
          of the
          Company immediately after the closing and a 2 to 1 reverse split, of 10,000,018.
          The Company’s former subsidiary, LLBA has been spun off, leaving Terra Block
          Consolidated, Inc. as the sole operating subsidiary of the Company after
          effecting the agreement. The new combination also assumed $100,660 of accounts
          payable. The combination was accounted for as a reverse merger whereby
          the
          acquired company is treated as the acquiring company for accounting
          purposes.
 
 Terra
          Block Consolidated, Inc. was incorporated in Nevada on May 30, 2002 and
          engages
          in the manufacture, distribution and application of technologically advanced
          building products through a licensing arrangement with Terra Block, Inc.
          Terra
          Block Consolidated, Inc. has the exclusive right to make, have made, use
          and
          sell Terra Block, Inc.’s products anywhere in the world. Terra Block, Inc. is a
          related party of Terra Block International, Inc. as a shareholder. The
          license
          agreements provide Terra Block Consolidated, Inc. the rights to all patented
          technologies, trade secret materials, copyrights, trademarks and all
          intellectual property of Terra Block Inc. The license is valid until terminated
          by Terra Block Consolidated, Inc. with 30 days advance written notice to
          Terra
          Block, Inc. or by Terra Block, Inc., if there is a material breach of the
          licensing agreement by Terra Block Consolidated, Inc. Under this agreement,
          Terra Block Consolidated, Inc. has the exclusive right to buy the license
          patent
          rights for $10,000,000. This agreement was terminated January 10,
          2005.
 
 On
          January 21, 2004, the Company entered into a Stock Purchase Agreement with
          an
          individual to sell 3,600,000 shares of common stock for $250,000. The purchaser
          also, is to receive redeemable common stock purchase warrants to acquire
          1,000,000 shares of common stock at an exercise price of $.10 per share
          until
          January 20, 2009. In addition, 1,500,000 shares of common stock were issued
          as a
          commission in connection with this stock sale.
 
 
 -8-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          1
          - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
 
 On
          August
          10, 2004, the Company issued 1,250,000 shares of common stock as compensation.
          The shares were valued at par value.
 
 On
          October 4, 2004, the Company issued 300,000 shares of common stock as prepaid
          interest. The shares were valued at par value.
 
 On
          October 29 and December 16, 2004, the Company entered into two stock
          subscription agreements with the same party. The agreements sold 10,000,000
          shares of common stock at $125,000. At June 30, 2005 there is $0 due the
          Company
          from this transaction.
 
 On
          December 16, 2004, the Company sold 1,200,000 shares of common stock for
          $15,000.
 
 On
          February 11, 2005, the Company changed it name to EarthBlock Technologies,
          Inc.
 
 On
          June
          8, 2005, the Company sold 4,000,000 shares of common stock for
          $10,000.
 
 On
          February 16, 2006, the Company sold 4,000,000 shares of common stock for
          $20,000.
 
 On
          February 21, 2006, the Company issued 2,500,000 shares of common stock
          for
          services. The shares issued were valued at the market value of the stock
          on date
          of issue, total value $87,500.
 
 On
          March
          29, 2006, the Company sold 1,500,000 shares of common stock for
          $7,500.
 
 On
          March
          30, 2006, the Company sold 1,500,000 shares of common stock for
          $7,500.
 
 On
          April
          26, 2006, the Company issued 2,500,000 shares of common stock for services.
          The
          shares issued were valued at the market value of the stock on date of issue,
          total value $300,000.
 
 On
          May 9,
          2006, the Company issued 2,000,000 shares of common stock for services.
          The
          shares issued were valued at the market value of the stock on date of issue,
          total value $120,000.
 
 On
          June
          27, 2006, the Company issued 1,250,000 shares of common stock for services.
          The
          shares issued were valued at the market value of the stock on date of issue,
          total value $37,500.
 
 
 -9-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          1
          - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
 
 On
          June
          27, 2006, the Company issued 11,400,000 shares of common stock to two note
          holders to stay their calling due the note. No formal agreement was signed.
          The
          shares issued were valued at the market value of the stock on date of issue,
          total value $342,000.
 
 On
          August
          1, 2006, the Company issued 2,000,000 shares of common stock to two individuals
          for services. The shares were valued at the market price of the stock on
          the
          date of the issue, total value $44,000.
 
 On
          August
          23, 2006, the Company issued 10,000,000 shares of common stock to three
          individuals for services. The shares were valued at the market price of
          the
          stock on the date of issue, total value $235,000.
 
 Basis
          of Consolidation:
 
 The
          accompanying consolidated financial statements include the accounts of
          EarthBlock Technologies, Inc. and Terra Block Consolidated, Inc. All significant
          inter-company accounts and transactions, if any, have been eliminated in
          consolidation.
 
 Cash
          and Cash Equivalents:
 
 For
          the
          purposes of the Statement of Cash Flows, the Company considers all short-term
          debt securities to be cash equivalents.
 
 Cash
          paid
          during the period for:
 **Since****2006**
                
                **2005**
                
                **Inception**Interest
                
                $
                0
                
                $
                0
                
                $
                0Income
                    taxes
                
                $
                0
                
                $
                0
                
                $
                0
 
 Income
          Taxes:
 
 The
          Company accounts for income taxes under a method, which requires a company
          to
          recognize deferred tax assets and liabilities for the expected future tax
          consequences of events that have been recognized in a company’s financial
          statements or tax returns. Under this method, deferred tax assets and
          liabilities are determined based on the difference between the financial
          statements carrying amounts and tax basis of assets and liabilities using
          enacted tax rates. The Company presently prepares its tax return on the
          cash
          basis and its financial statements on the accrual basis. No deferred tax
          assets
          or liabilities have been recognized at this time, since the Company has
          shown
          losses for both tax and financial reporting. The Company’s net operating loss
          carry forward at September 30, 2006 is approximately $2,300,000.
 -10-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          1
          - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
 
 Use
          of
          Estimates:
 
 The
          preparation of financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect certain reported amounts and disclosures. Accordingly, actual results
          could differ from those estimates.
 
 Development
          Stage:
 
 The
          Company is classified as a development stage entity since it devotes most
          of its
          activities to establishing business and its principal activities have not
          yet
          commenced.
 
 NOTE
          2 -
          NOTES PAYABLE
 
 Terra
          Block Consolidated, Inc.’s Notes Payable:
 
 On
          October 15, 2002 the Company entered into a loan agreement with an individual
          to
          borrow $15,000. The terms of the agreement called for the principal sum
          of
          $15,000 to be paid on or before November 15, 2002 and an additional interest
          amount of $15,000 to be paid on April 15, 2003. The note is unsecured.
          A payment
          of $7,500 was made on February 3, 2004. The Company is in default under
          this
          agreement. The lender has not made formal demand for payment to date. The
          balance due on this note at September 30, 2006 and 2005, was $7,500 plus
          accrued
          interest.
 
 On
          October 21, 2002 the Company entered into a loan agreement with an individual
          to
          borrow $10,000. The terms of the agreement called for the principal sum
          of
          $10,000 to be paid within 45 days, and an additional interest amount of
          $10,000
          to be paid within 180 days. The note is unsecured. A payment of $5,000
          was made
          on February 3, 2004. The Company is in default under this agreement. The
          lender
          has not made formal demand for payment to date. The balance due on this
          note at
          September 30, 2006 and 2005 was $5,000 plus accrued interest.
 
 On
          December 19, 2002 the Company entered into a loan agreement with an individual
          to borrow $10,000. The terms of the agreement called for the principal
          sum of
          $10,000 to be paid on or before April 15, 2003 plus interest of $2,000.
          In the
          event that the principal has not been repaid by April 30, 2003, additional
          interest is owed equal to $200 per month thereafter. In addition 10,000
          shares
          of common stock will be delivered as additional consideration. The note
          is
          unsecured. In addition to the issue of common stock, a payment of $5,000
          was
          made on February 3, 2004. The Company is in default under this agreement.
          The
          lender has not made formal demand for payment to date.
 
 -11-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          2
          - NOTES PAYABLE - CONTINUED
 
 The
          balance due on this note at September 30, 2006 and 2005 was $5,000 plus
          accrued
          interest.
 
 On
          December 19, 2002 the Company entered into a loan agreement with an individual
          to borrow $10,000. The terms of the agreement called for the principal
          sum of
          $10,000 to be paid on or before April 15, 2003 plus interest of $2,000.
          In the
          event that the principal has not been repaid by April 30, 2003, additional
          interest is owed equal to $200 per month thereafter. In addition 10,000
          shares
          of common stock will be delivered as additional consideration. The note
          is
          unsecured. In addition to the issue of common stock, a payment of $5,000
          was
          made on February 3, 2004. The Company is in default under this agreement.
          The
          lender has not made formal demand for payment to date. The balance due
          on this
          note at September 30, 2006 and 2005 was $5,000 plus accrued
          interest.
 
 On
          December 20, 2002 the Company entered into a loan agreement with an individual
          to borrow $10,000. The terms of the agreement called for the principal
          sum of
          $10,000 to be paid on or before March 20, 2003 plus interest of $2,000.
          The note
          is unsecured. A payment of $5,000 was made on February 3, 2004. The Company
          is
          in default under this agreement. The lender has not made formal demand
          for
          payment to date. The balance due on this note at September 30, 2006 and
          2005 was
          $5,000 plus accrued interest.
 
 On
          December 23, 2002 the Company entered into a loan agreement with an individual
          to borrow $5,000. The terms of the agreement called for the principal sum
          of
          $5,000 to be paid on or before April 23, 2003 plus interest of $1,000.
          The note
          is unsecured. A payment of $2,500 was made on February 3, 2004. The Company
          is
          in default under this agreement. The lender has not made formal demand
          for
          payment to date. The balance due on this note at September 30, 2006 and
          2005 was
          $2,500 plus accrued interest.
 
 On
          January 15, 2003 the Company entered into a loan agreement with an individual
          to
          borrow $20,000. The terms of the agreement called for the principal sum
          of
          $20,000 to be paid on or before April 30, 2003 plus interest of $4,000.
          In the
          event that the principal has not been repaid by April 30, 2003, additional
          interest is owed equal to $400 per month thereafter. In addition 20,000
          shares
          of common stock will be delivered as additional consideration. The note
          is
          unsecured. In addition to the issue of common stock, a payment of $10,000
          was
          made on February 3, 2004. The Company is in default under this agreement.
          The
          lender has not made formal demand for payment to date. The balance on this
          note
          at September 30, 2006 2005 was $10,000 plus accrued interest.
  -12-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          2
          - NOTES PAYABLE - CONTINUED
 
 On
          March
          14, 2003 the Company entered into a loan agreement with an individual to
          borrow
          $10,000. The terms of the agreement called for the principal sum of $10,000
          to
          be paid on or before July 14, 2003 plus interest of $2,000. The note is
          unsecured. A payment of $5,000 was made on February 3, 2004. The Company
          is in
          default under this agreement. The lender has not made formal demand for
          payment
          to date. The balance due on this note at September 30, 2006 and 2005 was
          $5,000
          plus accrued interest.
 
 EarthBlock
          Technologies, Inc.’s Notes Payable:
  On
          October 6, 2003 the Company entered into a loan agreement with an individual
          to
          borrow $20,000 at 10% interest due October 6, 2004. In addition 50,000
          shares of
          common stock will be delivered as additional consideration. The note is
          unsecured. The Company has issued the common stock required under this
          agreement. The balance on this note at September 30, 2006 and 2005 was
          $20,000
          plus accrued interest.
 
 On
          October 6, 2003 the Company entered into a loan agreement with an investment
          consortium to borrow $12,500 at 10% interest due October 6, 2004. In addition
          200,000 shares of common stock will be delivered as additional consideration.
          The note is unsecured. The Company has issued the common stock required
          under
          this agreement. The balance on this note at September 30, 2006 and 2005
          was
          $12,500 plus accrued interest.
 
 On
          October 6, 2003 the Company entered into a loan agreement with an individual
          to
          borrow $12,500 at 10% interest due October 6, 2004. The note is unsecured.
          The
          balance on this note at September 30, 2006 and 2005 was $12,500 plus accrued
          interest.
 
 On
          April
          30, 2004 the Company entered into a loan agreement with an Investment Company
          to
          borrow $100,000 at 10% interest due December 31, 2004. The note is unsecured.
          The balance on this note at September 30, 2006 and 2005 was $100,000 plus
          accrued interest.
 
 On
          July
          13, 2004 the Company entered into a loan agreement with an Investment Company
          to
          borrow $20,000 at 10% interest due January 15, 2005. The note is unsecured.
          The
          balance on this note at September 30, 2006 and 2005 was $20,000 plus accrued
          interest.
  -13-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          2
          - NOTES PAYABLE - CONTINUED
 
 On
          August
          23, 2005 the Company entered into a loan agreement with an individual to
          borrow
          $35,000 at 12% interest due February 23, 2006. The note is unsecured. The
          balance on this note at September 30, 2006 and 2005 was $35,000 and $0
          plus
          accrued interest respectively.
 
 On
          August
          23, 2005 the Company entered into a loan agreement with an Investment Company
          to
          borrow $15,000 at 12% interest due February 23, 2006. The note is unsecured.
          The
          balance on this note at September 30, 2006 and 2005 was $15,000 and $0
          plus
          accrued interest respectively.
 
 On
          June
          29, 2006, the Company entered into a loan agreement with an individual
          to borrow
          $114,000 at 12% interest due June 29, 2006. The note is unsecured. The
          balance
          on this note at September 30, 2006 and 2005 was $114,000 and $0 plus accrued
          interest respectively.
 
 On
          July
          5, 2006, the Company entered into a loan agreement with an individual to
          borrow
          $24,000 at 12% interest due July 5, 2007. The note is unsecured. The balance
          on
          this note at September 30, 2006 and 2005 was $24,000 and $0 plus accrued
          interest respectively.
 
 On
          July
          20, 2006, the Company entered into a loan agreement with an individual
          to borrow
          $7,000 at 12% interest due July 20, 2007. The note is unsecured. The balance
          on
          this note at September 30, 2006 and 2005 was $7,000 and $0 plus accrued
          interest
          respectively.
 
 On
          August
          4 2006, the Company entered into a loan agreement with an individual to
          borrow
          $22,500 at 12% interest due August 4, 2007. The note is unsecured. The
          balance
          on this note at September 30, 2006 and 2005 was $22,500 and $0 plus accrued
          interest respectively.
 
 On
          August
          17, 2006, the Company entered into a loan agreement with an individual
          to borrow
          $15,000 at 12% interest due August 17, 2007. The note is unsecured. The
          balance
          on this note at September 30, 2006 and 2005 was $15,000 and $0 plus accrued
          interest respectively.
 
 On
          June
          29, 2006, the Company entered into a loan agreement with an individual
          to borrow
          $24,000 at 12% interest due December 29, 2006. The note is unsecured. The
          balance on this note at September 30, 2006 and 2005 was $24,000 and $0
          plus
          accrued interest respectively.
 
 
 -14-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          2
          - NOTES PAYABLE - CONTINUED
 
 All
          notes
          except those dated June 29, 2006 or later are in default, payment was not
          made
          on notes stated due dates. The Company has not received any notices of
          default.
 
 NOTE
          3
          - STOCKHOLDERS’ EQUITY
 
 Preferred
          Stock:
 
 At
          March
          31, 2006 and December 31, 2005, the Company had 10,000,000 shares authorized
          of
          convertible preferred stock with a par value of $0.001 per share. Additional
          terms and conditions of the stock are to be set by the board of directors
          of the
          Company at the time of issue. On February 7, 2006, the Company established
          a
          Series A Preferred stock, consisting of two shares authorized and outstanding.
          The shares have no dividend rights, no liquidating preference, no conversion
          rights and no redemption rights. However, the two shares voting in aggregate,
          to
          vote on all shareholder matters equal to 60% of the total common share
          voting.
          There were 2 and 0 shares outstanding at September 30, 2006 and 2005
          respectively..
 
 Common
          Stock:
 
 At
          September 30, 2006 and 2005 the Company had 100,000,000 shares authorized
          common
          stock with a par value of $0.001 per share. There were 88,465,018 and 44,815,018
          shares outstanding at September 30, 2006 and 2005 respectively.
 
 Warrants
 
 On
          May 4,
          May 9, and June 22, 2006, the Company sold 1,000,000 Class A Warrants for
          $17,500. Total Class A Warrants sold were 3,000,000 for a total raised
          of
          $52,500. Class A Warrants exercise at a price equal to the average weighted
          price for the lowest eight days of the proceeding 20 trading days multiplied
          by
          70% per share, with a minimum exercise price of $.007 and a maximum exercise
          price equal to the greater of $.025 or 50% of the computed price. Class
          A
          Warrants vest monthly and shall expire 90 days from the day first
          vested.
 
 On
          July
          17 2006, the Company sold 1,000,000 Class A Warrants for $17,500. Class
          A
          Warrants exercise at a price equal to the average weighted price for the
          lowest
          eight days of the proceeding 20 trading days multiplied by 70% per share,
          with a
          minimum exercise price of $.007 and a maximum exercise price equal to the
          greater of $.025 or 50% of the computed price. Class A Warrants vest monthly
          and
          shall expire 90 days from the day first vested.
 
 
 -15-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          3
          - STOCKHOLDERS’ EQUITY - CONTINUED
 
 On
          August
          23, 2006, the Company sold 10,000,000 Class A Warrants for $50,000. Class
          A
          Warrants exercise at a price equal to the average weighted price for the
          lowest
          eight days of the proceeding 20 trading days multiplied by 70% per share,
          with a
          minimum exercise price of $.007 and a maximum exercise price equal to the
          greater of $.025 or 50% of the computed price. Class A Warrants vest monthly
          and
          shall expire 90 days from the day first vested.
 
 All
          warrants were exercised as of September 30, 2006.
 
 NOTE
          4
          - COMMITMENTS
 
 The
          Company rents its present shared office space on a month to month basis.
          The
          Company expects to continue on that basis in 2006. Rent expense through
          September 30, 2006 and 2005 was $11,843 and $10,815 respectively.
 
 NOTE
          5
          - DERIVATIVE LIABILITY ARRISING FROM WARRANTS
 
 The
          Company accounts for debt with embedded conversion features and warrant
          issues
          in accordance with EITF 98-5: *Accounting
          for convertible securities with beneficial conversion features or contingency
          adjustable conversion* and
          EITF
          No. 00-27: *Application
          of issue No 98-5 to certain convertible instruments.* Conversion features determined to be beneficial to the holder are valued
          at fair
          value and recorded to additional paid in capital. The Company determines
          the
          fair value to be ascribed to the detachable warrants issued with the convertible
          debentures utilizing the *Black-Scholes* method.
          Any discount derived from determining the fair value to the debenture conversion
          features and warrants is amortized to financing cost over the life of the
          debenture. The unamortized costs if any, upon the conversion of the warrants
          is
          expensed to financing cost on a pro rata basis over the life of the warrant.
 
 Debt
          issue with the variable conversion features are considered to be embedded
          derivatives and are accountable in accordance with FASB 133; *Accounting
          for Derivative Instruments and Hedging Activities* .
          The
          fairs value of the embedded derivative is recorded to derivative liability.
          This
          liability is required to be marked each reporting period. The resulting
          discount
          on the debt is amortized to interest expense over the life of the related
          debt.
 
  -16-
 **EarthBlock
          Technologies, Inc. and Subsidiary**
 (A
          Development Stage Company)
 NOTES
          TO
          FINANCIAL STATEMENTS
 September
          30, 2006
 
 NOTE
          6 -
          RELATED PARTIES
 
 The
          Company owed its officers who are also shareholders $603,432 and $673,560
          in
          accrued wages at September 30, 2006 and 2005 respectively. There are no
          other
          amounts due to or from these shareholder officers. The Company entered
          into
          employment agreements with its three officers. The agreements are identical.
          The
          agreements are for three years, call for annual wages of $120,000 each,
          with an
          annual inflation adjustment. The agreements also provide for twelve paid
          holidays, seven paid personal days and fifteen paid vacation days annually.
          In
          addition the Company is to provide $500,000 of group live insurance for
          each
          officer, at no cost. The agreements expired in June 2005.
 
 NOTE
          7
          - GOING CONCERN
 
 The
          Company has not generated significant revenues or profits to date. This
          factor
          among others raises considerable doubt the Company will be able to continue
          as a
          going concern .
 
 The
          Company’s continuation as a going concern depends upon its ability to generate
          sufficient cash flow to conduct its operations and its ability to obtain
          additional sources of capital and financing. The accompanying consolidated
          financial statements do not include any adjustments that may result from
          the
          outcome of this uncertainty. Managements plans to relieve these problems
          by
          continuing to raise working capital either through stock sales or loans.
  -17-


**Item
      2. Management’s Discussion and Analysis of Financial Condition or Plan of
      Operation**




The
      following discussion should be read in conjunction with our unaudited interim
      financial statements and related notes thereto included in this quarterly report
      and in our audited financial statements and Management’s Discussion And Analysis
      of Financial Condition or Plan of Operation (“MD&A”) contained in our Form
      10-KSB for the year ended December 31, 2005. Certain statements in the following
      MD&A are forward looking statements. Words such as “expects”, “anticipates”,
“estimates” and similar expressions are intended to identify forward looking
      statements. Such statements are subject to risks and uncertainties that could
      cause actual results to differ materially from those projected.




**GENERAL**




DESCRIPTION
      OF BUSINESS




EarthBlock
      Technologies, Inc. a Nevada Corporation was formerly Terra Block International,
      Inc., having been renamed effective February 11, 2005, (the “Company” or
“EarthBlock”) was formerly L.L. Brown International, Inc. (“L.L. Brown”). L.L.
      Brown was originally incorporated as Smart Industries, Inc. on February 19,
      1997. On February 14, 2003, L.L. Brown entered into a Share Exchange Agreement
      with Terra Block Consolidated. The Agreement provides for 100% of the shares
      of
      Terra Block Consolidated to be acquired by L.L. Brown in exchange for shares
      of
      common stock of L.L. Brown; for the establishment of a new Board of Directors
      consisting of Terra Block Consolidated directors; and, with total issued and
      outstanding common shares of the Company immediately after the closing of
      10,000,000. The Company’s former subsidiary, LLBA has been spun off, leaving
      Terra Block Consolidated as the sole operating subsidiary of the Company after
      effecting the Agreement.




INTRODUCTION




EarthBlock
      Technologies, Inc. uses compressed earth blocks in its building system to
      construct a variety of structures both commercial and residential, including
      warehouses, office buildings, outbuildings, retail stores, various types of
      walls and residences from expensive custom homes to low income housing.




The
      construction method is simple; utilizing properly mixed soil compressed into
      dense, non-fired, uniform building blocks at the building site. The blocks
      don’t
      require curing and are stacked on a proper foundation using thin slurry between
      each layer. A comprehensive bonding takes place between the blocks and results
      in a block-to-block bond, not a block-to-mortar bond as in concrete hollow
      block
      construction. This comprehensive bonding results in a monolithic structure and a
      block-to-block strength with very high shearing strength. Completed walls
      require a bond beam on top before the roof is installed. Completed walls receive
      a stucco finish. The system is fast, a single machine can produce over 3,800
      blocks per day and wall construction can be completed with unskilled labor.




The
      blocks are strong having compressive strength between 1,000 - 1,600 psi without
      any additives. Building codes in the United States require a non-fired masonry
      block to have a compressive strength of 300 psi.




The
      Company’s goal is to become the leading provider of durable, structurally sound,
      low cost, and environmentally friendly, residential and commercial buildings
      in
      the world.






-18-




COMPRESSED
      EARTH BLOCK CONSTRUCTION




The
      Company’s building system makes possible the large-scale construction of low
      cost, affordable, energy-efficient homes as well as a variety of commercial
      structures. EarthBlock’s suppliers have perfected machines that convert our most
      abundant raw material (common soil) into one of our most needed building
      components. These portable machines convert ordinary earth on a building site,
      into rock-hard, durable blocks, used in construction. The machine can be towed
      to a site by a normal pick-up truck or SUV. It takes the soil, which is already
      there in abundance and converts it into strong, stable building blocks. There
      is
      no material cost and no freight expense. The system utilizes low skilled labor
      to construct the walls and it’s fast as the blocks do not require curing.




The
      Company uses these blocks to build structures that have the following
      characteristics:




-
            The
                raw material - dirt - is readily available at the job site.




-
            No
                expensive additives required




-
            Skilled
                labor is not required for construction. Blocks are simply plumbed
                and
                stacked which reduces labor cost significantly.




-
            Excellent
                thermal performance, reducing heating and cooling
                costs.




-
            Low
                maintenance.




-
            Long
                lasting and durable.




-
            Non-toxic-
                materials are completely natural and don't out-gas toxic
                chemicals.




-
            Sound
                resistant.




-
            Fire
                resistant - earthen walls don't burn.




-
            Insect
                resistant - the walls are solid and very dense, discouraging insects.




-
            Very
                strong - highly resistant to extreme wind conditions as found in
                hurricanes and tornadoes.




-
            The
                monolithic walls and concrete bond beam create a structure very resistant
                to earthquakes.






-19-




CERTAIN
      RISK FACTORS




GOING
      CONCERN RISK




We
      have
      had and could have losses, deficits and deficiencies in liquidity, which could
      impair our ability to continue as a going concern.




In
      Note #
      6 to our consolidated financial statements, our independent auditors have
      indicated that certain factors raise substantial doubt about our ability to
      continue as a going concern.




The
      ability of the Company to continue as a going concern is dependent upon
      generating sufficient cash flow to conduct operations and obtaining additional
      capital and financing. Any financing activity is likely to result in significant
      dilution to current shareholders.




The
      Company’s strategic plan for dealing with its insufficient cash flow is
      currently being developed, and may include additional private placements of
      the
      Company’s common stock, the abandonment of unprofitable projects and the
      exchange of common stock for settlement of vendor accounts. There can be no
      assurance that any of the plans developed by the Company will produce cash
      flows
      sufficient to overcome current liquidity problems.




The
      Company’s long-term viability as a going concern is dependent on certain key
      factors, as follows:




-
            The
                Company’s ability to obtain adequate sources of outside financing.




-
            The
                Company’s ability to ultimately achieve adequate profitability and cash
                flows necessary to sustain continuing operations.




IMPLEMENTATION
      OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING




The
      Company’s management and auditor have raised grave concerns relative to the
      Company’s financial ability to continue as a going concern.  Management is
      and has been actively seeking solutions to the Company’s current financial
      dilemma and lack of adequate working capital and will continue to do so. 
However, unless the Company can find a solution to this problem, management
      will
      be facing a likelihood of selling the Company, shutting down operations, or
      declaring bankruptcy.




In
      search
      of a solution, the Company is actively pursuing alliances, mergers, licensing
      arrangements and joint venture relationships, including entities in which
      current management has an ownership interest, which will allow the Company
      to
      continue operation.  Any business relationship entered into will likely
      result in significant dilution of ownership to the shareholders with no
      assurance of successful continuation of the business of the Company.  Any
      such transactions may lead to changes in control, changes in future plans and
      ultimately the Company no longer trading on the NASDAQ Bulletin
      Board.




Further,
      as the Company requires working capital, sources of such capital may have
      onerous requirements which will likely result in significant dilution and
      further indebtedness.  The company may be required to reverse or forward
      split its stock in order to satisfy a potential investor, and may likely
      increase the number of its authorized shares providing a potential for
      additional dilution.






-20-




GOVERNMENTAL
      REGULATION




We
      are
      subject to general business regulations, including Federal and state
      construction, environmental and hazardous material handling regulations. In
      other countries in which we operate, we may be subject to additional regulations
      as well.




NEW
      PROJECTS.




The
      Company may undertake one or more new projects worldwide without limitation.
      Management may fail to accurately gauge conditions prior to undertaking a new
      project, and therefore may not achieve anticipated results from a new project.
      If this were to occur, the Company may experience lower cash flow from
      operations. To the extent that the Company incurs debt to finance a portion
      of
      the capital costs of a new project, the cash flow from the new project may
      be
      inadequate to cover the debt service.




WEATHER
      CONDITIONS




Due
      to
      the fact that a substantial portion of our revenues may be derived from
      construction operations, our business operations, revenues and operating income
      could be negatively affected by weather phenomenon such as but not limited
      to,
      hurricanes, monsoon rain seasons, droughts, excessive heat, wind-storms etc.
      Such weather phenomena could interfere with operations and disrupt delivery
      schedules and revenue streams. In addition, occurrences like those described
      above could negatively impact our customer’s ability to pay us, or interfere
      with financing operations within a specific region.




INTERNATIONAL




Foreign
      sales are expected to account for a portion of sales and revenue. Sales of
      products and services obtained outside the United States are typically
      negotiated, invoiced and paid in local currency. Changes in exchange rates
      may
      also adversely affect the ability of customers to purchase the Company’s
      products. Economic instability may have an adverse effect on the Company’s
      foreign sales. In addition, the Company’s international business strategy may
      require it to make significant investments outside of the United States.






-21-




**FORWARD-LOOKING
      INFORMATION**




The
      statements contained herein and other information contained in this report
      maybe
      based, in part, on management’s estimates, projections, plans and judgments.
      These forward-looking statements are subject to certain risks and uncertainties
      that could cause actual results to differ materially from historical results
      or
      those anticipated. In this report, the words “anticipates”, “believes”,
“expects”, “intends”, “future”, “plans”, “targets” and similar expressions
      identify forward-looking statements. Readers are cautioned not to place undue
      reliance on the forward-looking statements contained herein. The Company
      undertakes no obligation to publicly revise these forward-looking statements
      to
      reflect events or circumstances that may arise after the date hereof.
      Additionally, these statements are based on certain assumptions that may prove
      to be erroneous and are subject to certain risks including, but not limited
      to,
      The Company’s dependence on limited cash resources, its dependence on certain
      key personnel within the Company, and its ability to raise additional capital.
      The Company’s ability to generate long-term value for the common stockholder is
      dependent upon the utilizing the Terra Block process. There are many companies
      participating in the building industry, many with resources greater than the
      Company. Greater competition for profitable operations can increase prices
      and
      make it more difficult to develop project at reasonable multiples of cash flow.
      The Company believes that it will be able to compete in this environment and
      will be able to find attractive investments; however, it is not possible to
      predict competition or the effect this will have on the Company’s operations.
      The Company’s operations are also significantly affected by factors, which are
      outside the control of the Company, including the environmental and governmental
      regulations, as well as weather in the area of the Company’s operations.
      Accordingly, actual results may differ, possibly materially, from the
      predictions contained herein.




**Item
      3. Evaluation of Disclosure Controls and Procedures**




Gregory
      A. Pitner, President, has concluded that our disclosure controls and procedures
      are appropriate and effective. He has evaluated these controls and procedures
      as
      of a date within 90 days of the filing date of this report on Form 10-QSB.There
      were no significant changes in our internal controls or in other factors that
      could significantly affect these controls subsequent to the date of their
      evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.




James
      E.
      Hines, Chief Financial Officer, has concluded that our disclosure controls
      and
      procedures are appropriate and effective. He has evaluated these controls and
      procedures as of a date within 90 days of the filing date of this report on
      Form
      10-QSB. There were no significant changes in our internal controls or in other
      factors that could significantly affect these controls subsequent to the date
      of
      their evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.






-22-




**PART
      II**




Pursuant
      to the Instructions on Part II of the Form 10-QSB, Items 1, 3 and 5 are omitted.




**Item
      2. Changes in Securities**




None




**Item
      6 —Exhibits and Reports on Form 8-K**




(A)
      Exhibits




Exhibit
                31.1
            —
Certification
                of Chief Executive Officer of
                EarthBlock Technologies, Inc. required by Rule 13a — 14(1) or Rule 15d —
                14(a) of the Securities Exchange Act of 1934, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.




Exhibit
                31.2
            —
Certification
                of Chief Financial Officer of
                EarthBlock Technologies, Inc. required by Rule 13a — 14(1) or Rule 15d —
                14(a) of the Securities Exchange Act of 1934, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.




Exhibit
                32.1
            —
Certification
                of Chief Executive Officer of EarthBlock
                Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley
                Act of
                2002 and Section 1350 of 18 U.S.C. 63.




Exhibit
                32.2
            —
Certification
                of Chief Financial Officer of EarthBlock
                Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley
                Act of
                2002 and Section 1350 of 18 U.S.C. 63.




(B)
      Reports on Form 8-K




None




-23-






**SIGNATURES**






Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




November
                21, 2006EARTHBLOCK
                TECHNOLOGIES, INC.
              
              BY:
                /s/ Gregory A. Pitner
              Gregory
                A. Pitner
              CEO
                and Chairman










-24-