U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the period ended September 30, 2007o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the transition period from _______ to
                _______




Commission
      File No. 000-50701





HOUSERAISING,
      INC.


(Exact
      name of small business issuer as specified in its charter)





North
                Carolina
            
            56-2253025(State
                or other jurisdiction of
            
            (IRS
                Employer identification No.)incorporation
                or organization)





4801
                East Independence Blvd., Suite 201, Charlotte, North Carolina
                28212(Address
                of principal executive offices)





(704)
                532-2121(Issuer's
                telephone number)





Securities
                registered under Section 12(b) of the Act:NONE





Securities
      registered under Section 12(g) of the Act:





Common
      stock (par value $.001 per share)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





State
      the
      number of shares outstanding of each of the issuers’ classes of common equity,
      as of the latest practicable date:





Class
                of Stock
            
            Outstanding October 31, 2007Common
                Stock ($.001 par value)
            
            
            56,251,897Preferred
                Stock Class A ($.001 par value)
            
            
            1,000,000Preferred
                Stock Class B ($.001 par value)
            
            
            800,000Preferred
                Stock Class C ($.001 par value)
            
            
            700,000









REPORTS
      TO SECURITY HOLDERS





We
      are a
      reporting company under the requirements of the Securities Exchange Act of
      1934
      and will file quarterly, annual and other reports with the Securities and
      Exchange Commission. This quarterly report contains the required audited
      financial statements. We are not required to deliver a quarterly report to
      security holders and will not voluntarily deliver a copy of the quarterly report
      to security holders, except in connection with our annual meeting of
      shareholders. The reports and other information filed by us will be available
      for inspection and copying at the public reference facilities of the Commission,
      100 F Street, N.E., Washington, D.C. 20549.





Copies
      of
      such material may be obtained by mail from the Public Reference Section of
      the
      Commission at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates.
      Information on the operation of the Public Reference Room may be obtained by
      calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a
      World
      Wide Website on the Internet at http://www.sec.gov that contains reports, proxy
      and information statements and other information regarding registrants that
      file
      electronically with the Commission.





The
      rest of this page is left intentionally blank





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          -


HOUSERAISING,
      INC.


FORM
      10-QSB





For
      the
      Quarter ended September 30, 2007





TABLE
      OF
      CONTENTS





PageCautionary
                Statement and Risk Factors that May Affect Future Results
            4PART
                IITEM
                1.
            Selected
                Financial Statements
            5Balance
                Sheet – September 30, 2007 (unaudited)
            5Statements
                of Operations – Three Months Ended September 30, 2007 and 2006
                (unaudited)
            6Statements
                of Operations – Nine Months Ended September 30, 2007 and 2006
                (unaudited)
            7Statements
                of Cash Flows – Nine Months Ended September 30, 2007 and 2006
                (unaudited)
            8Notes
                to Financial Statements (unaudited)
            9ITEM
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Plan of
                Operations
            20ITEM
                3.
            Controls
                and Procedures
            29PART
                IIITEM
                1.
            Legal
                Proceedings
            30ITEM
                2.
            Changes
                in Securities
            31ITEM
                3.
            Default
                Upon Senior Securities
            32ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders
            32ITEM
                5.
            Other
                Information
            32ITEM
                6.
            Exhibits
                and Reports on Form 8-K
            34Signatures
            35




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          -




**Cautionary
      Statement and Risk Factors that May Affect Future Results**





This
      report and other presentations made by HouseRaising, Inc. (“HRI” or “Company”)
      and its subsidiaries contain “forward-looking statements,” which include
      statements that are predictive in nature, depend upon or refer to future events
      or conditions, and usually include words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “will,” “predicts,” “estimates,” “we believe,”
“the Company believes,” “management believes” or similar expressions. In
      addition, any statements concerning future financial performance (including
      future revenues, expenses, earnings or losses or growth rates), ongoing business
      strategies or prospects and possible future actions are also forward-looking
      statements. Forward-looking statements are based on current expectations and
      projections about future events and are subject to risks, uncertainties and
      the
      accuracy of assumptions concerning HRI and its subsidiaries, the performance
      of
      the industries in which it does business and economic and market factors, among
      other things. **These
      forward-looking statements are not guarantees of future
      performance.**





Risks,
      uncertainties and other important factors that could cause actual results to
      differ materially from those in forward-looking statements and from historical
      results include, but are not limited to, the following:


·
            the
                effect of changes in international, national and local economic and
                market
                conditions, especially where our operations are conducted and where
                prospective purchasers of homes
                live;


·
            the
                effects of weather and natural disasters or global developments,
                including
                the effects of terrorist acts and war on terrorism, U.S. presence
                in Iraq
                and Afghanistan, potential conflict or crisis in North Korea or Middle
                East and potential avian flu pandemic, negatively affecting local
                homebuilding industry and adversely affecting new home installation
                market;


·
            the
                timing and extent of changes in interest rates and the shape of the
                yield
                curve and the recent sub-prime mortgage
                crisis;


·
            negative
                trends in residential homebuilding adversely affecting our
                business;


·
            actions
                by competitors that negatively affect us—the homebuilding market is
                extremely competitive, characterized by competition from a number
                of
                homebuilders in each market in which we operate, and there are few
                barriers to entry;


·
            no
                assurance that the Company will be able to recruit quality homebuilders
                and sales personnel in order to meet the goals set forth in its business
                plan and planned rollout of Zone operations, realty/broker, membership
                and
                disaster relief services;


·
            no
                assurance that anticipated acquisitions will materialize and/or be
                successfully integrated into
                operations;


·
            the
                risks of suffering losses that are uninsured—construction defect and home
                warranty claims arising in the ordinary course of business are common
                in
                the homebuilding industry and can be costly; it is possible that
                we may
                not maintain adequate insurance against these claims and may experience
                losses that could hurt our
                business;


·
            the
                effects of changes in accounting principles applicable to HRI and
                its
                subsidiaries;


·
            given
                the prominence of the automated design/build system in HRI’s operations
                and business plan, there is a risk that the automated design/build
                system
                may not completely fill builder needs or generate significant retail
                sales
                in the future;


·
            while
                the company has filed a patent registration to protect its intellectual
                property, until patent pending has been issued, HRI’s technology and
                software are at risk of being copied by
                competitors;


·
            HRI
                is an early stage company and our common stock trades on the
                over-the-counter market and is subject to high volatility; future
                sales of
                common stock could adversely affect the stock
                price;


·
            HRI
                provides S-8 shares as compensation for some services rendered which
                could
                impact stock volatility and future
                issuance;


·
            principal
                stockholders control business affairs which means investors will
                have
                little or no participation in
                business;


·
            the
                risk that an investor in the Company will never see a return on investment
                and the stock may become worthless;


·
            while
                the company has obtained capital through its line of credit with
                Wachovia
                Bank, there is the risk that the Company will be unable to obtain
                additional capital or unable to establish credit arrangements or
                extend
                existing arrangements on satisfactory terms, which would require
                it to
                curtail operations;


·
            to
                the extent additional capital is raised through the sale of equity
                and/or
                convertible debt securities, this could result in dilution to shareholders
                and/or increased debt service;


·
            we
                have never paid dividends and do not intend to pay dividends for
                the
                foreseeable future given need to retain earnings to finance the
                development and expansion of the
                business;


·
            federal
                and state governmental and regulatory actions, such as changes in
                laws,
                rules and regulations applicable to HRI and its subsidiaries (including
                changes in taxation, environmental laws and regulations, immigration
                laws,
                occupational safety and health acts, workmen’s compensation statutes,
                unemployment insurance and governmental fees and assessments);


·
            other
                risks or uncertainties described elsewhere in this report and in
                other
                periodic reports previously and subsequently filed by HRI or its
                predecessor company with the Securities and Exchange Commission
                (SEC).





Forward-looking
      statements speak only as of the date of the report, presentation or filing
      in
      which they are made. Except to the extent required by the federal securities
      laws, HRI and its subsidiaries undertake no obligation to publicly update or
      revise any forward-looking statements, whether as a result of new information,
      future events or otherwise.




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**PART
      I**





**ITEM
      1. SELECTED FINANCIAL STATEMENTS**





**HouseRaising,
                Inc. and Subsidiaries**
              **Consolidated
                Balance Sheet**
              **September
                30, 2007**




**ASSETS**Current
                  Assets:Cash
              
              $
              297,177Securities
                  and Escrow
              
              
              11,109Excess
                  costs over billings on uncompleted projects
              
              
              159,331Prepaid
                  Expenses
              
              
              1,011,111Accounts
                  Receivable
              
              
              105,472Total
                  Current Assets
              
              
              1,584,200Property
                  and Equipment:Property
                  and Equipment
              
              
              705,488Accumulated
                  Depreciation
              
              
              (240,820
              )Total
                  Furniture and Equipment
              
              
              464,668Capitalized
                  Software:Capitalized
                  Software
              
              
              14,577,344Accumulated
                  Depreciation
              
              
              (686,148
              )Total
                  Capitalized Software
              
              
              13,891,196Other
                  Assets
              
              
              110,436TOTAL
                  ASSETS
              
              $
              16,050,500**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  Liabilities:Line
                  of Credit
              
              $
              7,260,109Current
                  Maturities of Notes Payable
              
              
              20,668Interest
                  Payable
              
              
              12,540Accounts
                  Payable and Other Payables
              
              
              247,701Total
                  Liabilities
              
              
              7,541,018Stockholders’
                  EquityPreferred
                  Stock Class A-Convertible ($.001 par value; 1,000,000 authorized;
                  1,000,000 issued and outstanding)
              
              
              1,000Preferred
                  Stock Class B-Convertible ($.001 par value; 800,000 authorized;
                  800,000
                  issued and outstanding)
              
              
              800Preferred
                  Stock Class C-Convertible ($.001 par value; 700,000 authorized;
                  700,000
                  issued and outstanding)
              
              
              700Common
                  Stock ($.001 par value; 100,000,000 authorized; 56,251,897 issued
                  and
                  outstanding)
              
              
              56,252Common
                  Stock Subscribed but not Issued
              
              
              1,589,437Paid
                  in Capital
              
              
              20,300,433Retained
                  Deficit
              
              
              (13,439,140
              )Total
                  Stockholder’s Equity
              
              
              8,509,482Total
                  Liabilities and Stockholders' Equity
              
              $
              16,050,500




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**HouseRaising,
                  Inc. and Subsidiaries**
                **Consolidated
                  Statement of Operations**
                **For
                  the three months ended September 30, 2007 and
                  2006**


2007
            
            2006**SALES
                AND COST OF SALES**Sales
            
            $
            1,084,155
            
            $
            282,477Gross
                Profit
            
            
            84,356
            
            
            10,122**OTHER
                REVENUES**Realty
                Income
            
            
            104,126
            
            
            0Other
                Income
            
            
            0
            
            
            5,528Total
                Other Revenues
            
            
            104,126
            
            
            5,528GROSS
                MARGIN
            
            
            188,482
            
            
            15,650**EXPENSES**Selling,
                general and administrative
            
            
            1,063,468
            
            
            855,376Consulting,
                professional fees, and salaries—stock
                based
                comp
            
            
            344,620
            
            
            523,139Interest
            
            
            114,093
            
            
            63,055Depreciation
            
            
            250,584
            
            
            8,421TOTAL
                EXPENSES
            
            
            1,772,765
            
            
            1,449,991Net
                Loss
            
            $
            (1,584,283
            )
            $
            (1,434,341
            )Net
                (loss) per share—basic and fully diluted
            
            
            (0.03
            )
            
            (0.03
            )Weighted
                average shares outstanding
            
            
            54,675,610
            
            
            49,983,066





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




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          6
          -







**HouseRaising,
                  Inc. and Subsidiaries**
                **Consolidated
                  Statement of Operations**
                **For
                  the nine months ended September 30, 2007 and
                  2006**




2007
            
            2006**SALES
                AND COST OF SALES**Sales
            
            $
            1,410,513
            
            $
            793,443Gross
                Profit
            
            
            129,230
            
            
            80,016**OTHER
                REVENUES**Realty
                Income
            
            
            224,630
            
            
            0Other
                Income
            
            
            6,705
            
            
            5,528Total
                Other Revenues
            
            
            231,335
            
            
            5,528GROSS
                MARGIN
            
            
            360,565
            
            
            85,544**EXPENSES**Selling,
                general and administrative
            
            
            2,543,811
            
            
            1,445,640Consulting,
                professional fees, and salaries—stock based comp
            
            
            1,290,780
            
            
            1,252,271Interest
            
            
            379,895
            
            
            141,380Depreciation
            
            
            746,892
            
            
            25,285TOTAL
                EXPENSES
            
            
            4,961,378
            
            
            2,864,576Net
                Loss
            
            $
            (4,600,813
            )
            $
            (2,779,032
            )Net
                (loss) per share—basic and fully diluted
            
            
            (0.09
            )
            
            (0.06
            )Weighted
                average shares outstanding
            
            
            53,098,495
            
            
            47,983,066





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




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**HouseRaising,
                Inc. and
                Subsidiaries**
              **Consolidated
                Statements of Cash Flows**
              **For
                the nine months ended September 30, 2007 and
                2006**





2007
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (4,600,813
            )
            $
            (2,779,032
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Value
                of Stock issued for services deducted as expenses (non cash
                item)
            
            
            1,405,614
            
            
            1,743,492Depreciation
            
            
            746,892
            
            
            25,285(Increase)/Decrease
                in Accounts Receivable
            
            
            394,528
            
            
            (157
            )(Increase)/Decrease
                in Excess Costs Over Billings on UncompletedContracts
            
            
            61,179
            
            
            (60,314
            )(Increase)/Decrease
                in Other Assets
            
            
            (56,236
            )
            
            -Increase/(Decrease)
                in Interest payable, accounts Payable & other accruals
            
            
            32,118
            
            
            20,932NET
                CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
            
            
            (2,016,718
            )
            
            (1,049,794
            )CASH
                FLOWS FROM INVESTMENT ACTIVITIES:Investment
                in subsidiary operations
            
            
            (15,000
            )
            
            (7,500
            )(Increase)/Decrease
                in Capitalized Software
            
            
            (425,388
            )
            
            (955,343
            )Purchase
                of property and equipment
            
            
            (271,450
            )
            
            (59,564
            )NET
                CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES
            
            
            (711,838
            )
            
            (1,022,407
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from sale of common stock
            
            
            100,000
            
            
            200,000Reduction
                in Common Stock Subscribed but not Issued
            
            
            (217,825
            )
            
            -Principal
                Reductions on Notes Payable
            
            
            (221,035
            )
            
            -Increase/(Decrease)
                in borrowings on Line of Credit
            
            
            3,208,000
            
            
            1,782,090NET
                CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
            
            
            2,869,140
            
            
            1,982,090NET
                  INCREASE/(DECREASE) IN CASH ANDCASH EQUIVALENTS
            
            
            140,584
            
            
            (90,111
            )CASH
                AND CASH EQUIVALENTS:Beginning
                of Period
            
            
            167,702
            
            
            292,383End
                of period
            
            $
            308,286
            
            $
            202,272SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:CASH
                PAID DURING THE PERIOD FOR:Interest
            
            $
            379,895
            
            $
            141,380NON-CASH
                OPERATING ACTIVITIES:Value
                of Stock and Warrants issued in exchange for services
            
            $
            1,405,614
            
            $
            1,743,492Value
                of Preferred Stock issued in exchange for services
                (prepaid)
            
            $
            1,011,111
            
            
            —NON-CASH INVESTMENT
                ACTIVITIES:Value
                of Common Stock issued for additions to Capitalized
                Software
            
            $
            195,000
            
            $
            236,250Value
                of Preferred Stock issued for additions to Capitalized
                Software
            
            $
            234,000
            
            $
            1,375,000NON-CASH
                FINANCING ACTIVITIES:Value
                of Common Stock issued for debt converted to stock
            
            $
            212,401
            
            $
            325,946


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




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          8
          -


**NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Business
      Activity —HouseRaising,
      Inc. (the Company) and Subsidiaries is in the business of selling, designing,
      building and managing design/build and renovation projects in the residential
      homebuilding market for homebuyers and homebuilders. The Company provides a
      proprietary turnkey home design and management system that it uses to build
      custom residential homes and renovation projects. Its customers are principally
      located in the Southeast USA with a current concentration in North and South
      Carolina and the Gulf Coast.





The
      following is a list of all subsidiaries of the Company:


HouseRaisingAcademy,
      LLC (N.C. LLC)—8/9/2005 owned 100% by HouseRaising, Inc.


HouseRaisingMembership,
      LLC (N.C. LLC)—6/23/2006 owned 100% by HouseRaising, Inc.


HouseRaisingRealty,
      LLC (N.C. LLC)—12/12/2006 owned 100% by HouseRaising, Inc.


HouseRaising
      Disaster Relief, LLC (N.C. LLC)—6/15/2006 owned 100% by HouseRaising,
      Inc.


HouseRaisingUSA,
      LLC (Delaware LLC)—7/22/2003 owned 100% by HouseRaising, Inc.


HouseRaising
      of Georgia, LLC (G.A. LLC)—11/20/2006 owned 100% by HouseRaisingUSA,
      LLC


HouseRaising
      of the Gulf Coast, LLC (M.S. LLC)—10/24/2006 owned 100% by HouseRaisingUSA,
      LLC


Jackson
      Homes, LLC (L.A. LLC)—5/1/07 owned 50% by HouseRaising of the Gulf Coast,
      LLC


Kaybeau
      Homes, LLC (L.A. LLC)—5/1/07 owned 50% by HouseRaising of the Gulf Coast,
      LLC


K.B.
      Riley Homes, LLC (L.A. LLC)—6/6/07 owned 50% by HouseRaising of the Gulf Coast,
      LLC


Patrick
      Rowe Homes, LLC (L.A. LLC)—6/4/07 owned 50% by HouseRaising of the Gulf Coast,
      LLC


HouseRaising
      of Louisiana, LLC (L.A. LLC)—1/13/2006 owned 100% by HouseRaisingUSA,
      LLC


Trojan
      Custom Homes, LLC (L.A. LLC)—2/2/2007 owned 50% by HouseRaising of Louisiana,
      LLC


HouseRaising
      of the Carolinas, LLC (N.C. LLC)—5/23/2003 owned 100% by HouseRaising,
      Inc.


Camy-J
      Homes, LLC (N.C. LLC)—5/24/07 owned 50% by HouseRaising of the Carolinas,
      LLC


Freeman
      Custom Homes, LLC (S.C. LLC)—3/12/07 owned 50% by HouseRaising of the Carolinas,
      LLC


Harris
      Homes, LLC (N.C. LLC)—1/30/2007 owned 50% by HouseRaising of the Carolinas,
      LLC


Hawn
      Homes, LLC (N.C. LLC)—1/30/2007 owned 50% by HouseRaising of the Carolinas,
      LLC


HouseRaising
      of Charleston, LLC (S.C. LLC)—2/23/2005 owned 100% by HouseRaising of the
      Carolinas, LLC


J.
      Stanley Homes, LLC (S.C. LLC)—6/22/07 owned 50% by HouseRaising of the
      Carolinas, LLC


McClennan
      Homes, LLC (N.C. LLC)—5/30/07 owned 50% by HouseRaising of the Carolinas,
      LLC


R.A.
      Lawrence Homes, LLC (S.C. LLC)—4/24/07 owned 50% by HouseRaising of the
      Carolinas, LLC


Robinson
      Custom Homes LLC (N.C. LLC)—3/9/07 owned 50% by HouseRaising of the Carolinas,
      LLC


R.S.
      Stover Homes, LLC (N.C. LLC)—6/1/07 owned 50% by HouseRaising of the Carolinas,
      LLC


West
      Custom Homes, LLC (N.C. LLC)—2/9/2007 owned 50% by HouseRaising of the
      Carolinas, LLC


White
      Homes, LLC (S.C. LLC)—2/13/2007 owned 50% by HouseRaising of the Carolinas,
      LLC





Some
      of
      these limited liability companies (100% owned by HouseRaising, Inc. or
      subsidiary) provide managerial services to the Company’s homebuilding operations
      (e.g. HouseRaisingMembership). These limited liability companies operate within
      specific guidelines and operating procedures established by HouseRaising, Inc.
      documents and any homebuilder engaged by the company or its subsidiaries is
      required to be properly licensed.





As
      of the
      date of this report, all design/build contracts have been engagements between
      HouseRaising’s 100% owned, licensed building companies, principally HouseRaising
      of the Carolinas, LLC and HouseRaising of the Gulf Coast, LLC. The Company
      has
      not signed any design/sales contracts with any of the 50% limited liability
      companies and is in the process of dissolving or restructuring these entities
      because the Company has determined that the duplicate insurance costs of
      operating in such a manner would be too great a burden to the building process.
      Each custom, designed and built home is financed in the name of the
      homebuyer.





In
      2003,
      the Company formed 2 subsidiary companies, HouseRaising of Greater Charlotte,
      LLC (which subsequently changed its name to HouseRaising of the Carolinas,
      LLC)
      and HouseRaisingUSA, LLC for organizing and owning the regional limited
      liability companies which have been formed from 2005 to present. In 2005, the
      Company formed HouseRaisingAcademy, LLC to develop and manage the Company’s
      internet based E-Learning and Homebuilder Management System (named System C)
      which was completed at the end of 2006. In mid-2006, the Company formed two
      companies: HouseRaising Disaster Relief, LLC in response to the needs of various
      financial, insurance and government entities to respond to the rebuilding needs
      following disaster situations, such as occurred in the Gulf Coast, and
      HouseRaisingMembership, LLC as a means of providing custom homebuilders various
      services as part of their affiliation with HouseRaising. In late-2006, the
      Company formed HouseRaisingRealty, LLC in response to the need of homebuyers
      to
      not only build a new home, but also be able to secure a lot for the new home
      and
      sell their existing home. In late-2006, the Company formed HouseRaising of
      the
      Gulf Coast, LLC which serves as the zone operation for the Louisiana,
      Mississippi and Gulf Coast regions.




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          9
          -




**NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)**





Cash
      and Cash Equivalents —For
      purposes of the Consolidated Statement of Cash Flows, the Company considers
      liquid investments with an original maturity of three months or less to be
      cash
      equivalents.





Management’s
      Use of Estimates —The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosures of contingent assets and liabilities
      at
      the date of consolidated financial statements and the reported amounts of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





Revenue
      Recognition —The
      Company’s revenue is derived from 1) selling, designing, managing and building
      custom residential homes and renovation projects which reflect the home’s
      contract price [Custom Homebuilding Operations]; 2) commissions from real estate
      sales transactions of land, new homes or a customer’s existing home [Realty
      Services]; and 3) other fees, including a) consulting fees for disaster relief
      services [Disaster Relief Services]; b) membership fees for builder members
      that
      wish to take advantage of services provided by the company for independent
      builders [Builder Memberships]; and c) marketing fees for co-branding agreements
      [Other Revenues].





Revenues
      and profits from Custom Homebuilding Operations (construction contracts) are
      recognized on the completed-contract method and therefore when the project
      is
      completed (or closed). This method is used because financial position and
      results of operations do not vary significantly from those which would result
      from use of percentage-of-completion method and is conservative. A contract
      is
      considered complete when all costs except insignificant items have been incurred
      and the installation is operating according to specifications or has been
      accepted by the customer. Contract costs include all direct materials and labor
      costs and those indirect costs related to contract performance, such as indirect
      labor, supplies, tools, repairs, and depreciation costs. General and
      administrative costs are charged to expense as incurred. Costs in excess of
      amounts billed are classified as current assets under costs in excess of
      billings on uncompleted contracts. Billings in excess of costs are classified
      under current liabilities as billings in excess of costs on uncompleted
      contracts. The Company recognizes sales and service fees (approximately 6%
      of
      the home’s contract price) in the initial construction stage for interior
      design, architectural and structural engineering drawings provided to the
      customer. There are instances where sales and services fees will be the only
      services provided to a customer.





Comprehensive
      Income (Loss) —The
      Company adopted Financial Accounting Standards Board Statement of Financial
      Accounting Standards (SFAS) No. 130, *“Reporting
      Comprehensive Income”* ,
      which
      establishes standards for the reporting and display of comprehensive income
      and
      its components in the consolidated financial statements. There were no items
      of
      comprehensive income (loss) applicable to the Company during the periods covered
      in the consolidated financial statements.





Capitalized
      Software —Certain
      capitalized software assets have been contributed to the Company from related
      entities under common ownership and control. The capitalized software assets
      include certain external direct costs of materials and services consumed in
      developing internal-use software (System C) for home plans and designs, and
      operating systems and policies for homebuilders. These costs include payroll
      and
      payroll-related costs for employees and contractors who are directly associated
      with and who devote time to the internal-use computer software project (to
      the
      extent of the item spent directly on the project) during the application
      development stage. Training costs, data conversion costs, internal costs for
      upgrades and enhancements, and internal costs incurred for maintenance are
      all
      expensed as incurred. General and administrative costs and overhead costs are
      also expensed as incurred. The Company commenced amortizing Capitalized Software
      (System-C) during the first quarter of 2007. The Capitalized Software will
      be
      amortized on a straight-line basis over the estimated economic life of the
      asset
      (determined to be 15 years) at a quarterly expense of approximately $229,000.
      The Company invested over 7 years of development time and expertise in putting
      its capitalized software together. The system itself is based on over 40 years
      of residential homebuilding experience of the founder, Mr. Robert V. McLemore.
      The Company is not aware of any other entity that has a system that has the
      capabilities of System-C. Typically it takes between 9 and 12 months to build
      a
      custom home. Using FAS 142, the company believes that the estimated useful
      life
      of this asset is 15 years, which would be the period the asset is expected
      to
      contribute directly and indirectly to the future cash flows of the
      Company.





S-8
      Share Payments —The
      Company currently provides S-8 registered shares as compensation for certain
      services rendered as a means of conserving cash. The Company accrues the value
      of services rendered as an expense or capital expenditure (when it is readily
      determinable and meets the tests under FASB 123) instead of the stock price
      at
      the time the shares are transferred. Employees, consultants and vendors that
      receive such shares understand that there is risk associated with the volatility
      of the share price.





Advertising
      Costs —Advertising
      costs are expensed as incurred. The Company does not incur any direct-response
      advertising costs.




-
          10
          -








**NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)**





Net
      Loss per Common Share —Statement
      of Financial Accounting Standard (SFAS) No. 128 requires dual presentation
      of
      basic and diluted earnings per share (EPS) with a reconciliation of the
      numerator and denominator of the EPS computations. Basic earnings per share
      amounts are based on the weighted average shares of common stock outstanding.
      If
      applicable, diluted earnings per share would assume the conversion, exercise
      or
      issuance of all potential common stock instruments such as options, warrants
      and
      convertible securities, unless the effect is to reduce a loss or increase
      earnings per share. This presentation has been adopted for the period presented.
      There were no adjustments required to net loss for the period presented in
      the
      computation of diluted earnings per share.





Income
      Taxes —Income
      taxes are provided in accordance with Statement of Financial Accounting
      Standards (SFAS) No. 109, *“Accounting
      for Income Taxes.”* A
      deferred tax asset or liability is recorded for all temporary differences
      between financial and tax reporting and net operating loss-carryforwards.
      Deferred tax assets are reduced by a valuation allowance when, in the opinion
      of
      management, it is more likely than not that, and some portion or the entire
      deferred tax asset will not be realized. Deferred tax assets and liabilities
      are
      adjusted for the effect of changes in tax laws and rates on the date of
      enactment.





Fair
      Value of Financial Instruments —The
      carrying amounts reported in the consolidated balance sheet for cash, accounts
      receivable and payable approximate fair value based on the short-term maturity
      of these instruments.





Accounts
      Receivable —Accounts
      deemed uncollectible are written off in the year they become uncollectible.
      During 2006, Accounts Receivable in the amount of $22,918 were deemed
      uncollectible and written off to bad debt expense.





Impairment
      of Long-Lived Assets —The
      Company evaluated the recoverability of its property and equipment, and other
      assets in accordance with Statements of Financial Accounting Standards (SFAS)
      No. 144, *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”* which
      requires recognition of impairment of long-lived assets in the event the net
      book value of such assets exceeds the estimated future undiscounted cash flows
      attributable to such assets or the business to which such intangible assets
      relate. Each year the company uses its operating forecast for the subsequent
      three year period and the Gordon method of projecting a terminal value for
      future results based on the third-year cash flow projections to determine the
      estimated future undiscounted cash flows attributable to its principal asset.
      The company then also calculates discounted cash flows using a 20% discount
      rate. In both instances there was not impairment. Actual results for 2005 and
      2006 did not meet the cash flow projections prepared in our assessment of the
      recoverability of the capitalized software as of December 31, 2004 and 2005,
      respectively. The principal reason that these projections were not achieved
      is
      that the time to develop the capitalized software was significantly greater
      than
      expected. If this situation were to continue for an indefinite period of time,
      this may have resulted in the capitalized software being impaired. The Company
      did, however, complete the capitalized software as of December 31, 2006 and
      will
      commence depreciating the asset in 2007. Going forward, if the Company is not
      able to generate sufficient design/build contracts, it is possible the
      capitalized software could be impaired.





Property
      and Equipment —Property
      and equipment is stated at cost. Depreciation is provided by the straight-line
      method over the estimated economic life of the property and equipment remaining
      from five to seven years.





Recent
      Accounting Pronouncements —In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 154 *“Accounting
      Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB
      Statement No. 3.”* This
      Statement replaces APB Opinion No. 20, “Accounting Changes”, and FASB Statement
      No. 3, “Reporting Accounting Changes in Interim Financial Statements” and
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. This Statement applies to all voluntary changes in
      accounting principle.  It also applies to changes required by an accounting
      pronouncement in the unusual instance that the pronouncement does not include
      specific transition provision. When a pronouncement includes specific transition
      provisions, those provisions should be followed. The Company has no transactions
      that would be subject to SFAS 154.





In
      February 2006, the Financial Accounting Standards Board (FASB) issued Statement
      of Financial Accounting Standards (SFAS) No. 155, Accounting for Certain Hybrid
      Instruments-an amendment of FASB Statements No. 133 and 140. SFAS 155 allows
      financial instruments that have embedded derivatives to be accounted for as
      a
      whole if the holder elects to account for the whole instrument on a fair value
      basis. SFAS 155 eliminates the need to bifurcate the derivative from its host,
      as previously required under Statement of Financial Accounting Standards No.
      133, Accounting for Derivative Instruments and Hedge Accounting. SFAS 155 also
      amends SFAS 133 by establishing a requirement to evaluate interests in
      securitized financial assets to determine whether they are free standing
      derivatives or whether they contain embedded derivatives that require
      bifurcation. SFAS 155 is effective for all hybrid financial instruments acquired
      or issued by the Company on or after January 1, 2007. The Company does not
      anticipate any material impact to its financial condition or results of
      operations as a result of the adoption of SFAS 155.




-
          11
          -




**NOTE
      A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)**





Recent
      Accounting Pronouncement (cont’d)





In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards (SFAS) No. 156, *“Accounting
      for Servicing of Financial Assets”* .
      SFAS
      156 addresses the accounting for recognized servicing assets and servicing
      liabilities related to certain transfers of the servicer’s financial assets and
      for acquisitions or assumptions of obligations to service financial assets
      that
      do not relate to the financial assets of the servicer and its related parties.
      SFAS 156 requires that all recognized servicing assets and servicing liabilities
      are initially measured at fair value, and subsequently measured at either fair
      value or by applying an amortization method for each class of recognized
      servicing assets and servicing liabilities. SFAS 156 is effective in fiscal
      years beginning after September 15, 2006. The adoption of SFAS 156 is not
      expected to have a material impact on our consolidated financial
      statements.





In
      June
      2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes—an
      interpretation of FASB No. 109. This Interpretation clarifies the accounting
      for
      uncertainty in income taxes recognized in an enterprise’s financial statements
      in accordance with FASB No. 109, “Accounting for Income Taxes”. This
      interpretation prescribes recognition of threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition. This interpretation is effective for fiscal
      years beginning after December 15, 2006. Earlier application is permitted if the
      entity has not yet issued interim or annual financial statements for that fiscal
      year. The adoption of this standard is not expected to have a material effect
      on
      the Company’s results of operations or financial position.





In
      September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”.
      This Statement defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles (GAAP), and expands
      disclosures about fair value measurements. This statement applies under other
      accounting pronouncements that require or permit fair value measurements, the
      Board having previously concluded in those accounting pronouncements that fair
      value is the relevant measurement attribute. Accordingly, SFAS No. 157 does
      not
      require any new fair value measurements. However, for some entities, the
      application of SFAS No. 157 will change current practice. This Statement is
      effective for fiscal years beginning after November 15, 2007, and all interim
      periods within those fiscal years. Earlier application is permitted if the
      entity has not yet issued interim or annual financial statements for that fiscal
      year. Early adoption of this standard is not expected to have a material effect
      on the Company’s results of operations or its financial position, but the
      Company is evaluating the Statement to determine what impact, if any, it will
      have on the Company.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS 158”).
      This statement requires balance sheet recognition of the funded status, which
      is
      the difference between the fair value of plan assets and the benefit obligation,
      of pension and postretirement benefit plans as a net asset or liability, with
      an
      offsetting adjustment to accumulate other comprehensive income in shareholders’
equity. In addition, the measurement date, the date at which plan assets and the
      benefit obligation are measured, is required to be the company’s fiscal year
      end. The adoption of this standard is not expected to have a material effect
      on
      the Company’s results of operations or financial position.





**NOTE
      B—SUPPLEMENTAL CASH FLOW INFORMATION**





Supplemental
      disclosures of cash flow information for the years ended December 31, 2006
      and
      2005 are summarized as follows:





CASH
      PAID
      DURING THE YEARS FOR INTEREST AND INCOME TAXES:


**2006**
            
            **2005**Income
                Tax
            
            $
            -
            
            $
            -Interest
            
            $
            224,212
            
            $
            96,180








NON-CASH
      FINANCING ACTIVITIES:





**2006**
            
            **2005**Common
                stock issued for services
            
            $
            2,172,653
            
            $
            2,944,726




-
          12
          -




**NOTE
      C—INCOME TAXES**





Due
      to
      the operating loss and the inability to recognize an income tax benefit there
      from, there is no provision for current or deferred federal or state income
      taxes for the years ended December 31, 2006 and 2005.





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amount used for federal and state income tax purposes.





The
      Company’s total deferred tax asset, calculated using federal and state effective
      tax rates, as of December 31, 2006 is as follows:





Total
                Deferred Tax Asset
            
            $
            1,277,000Valuation
                Allowance
            
            
            (1,277,000
            )Net
                Deferred Tax Asset
            
            $
            -





The
      reconciliation of income taxes computed at the federal statutory income tax
      rate
      to total income taxes for the years ended December 31, 2006 and 2005 is as
      follows:





**2006**
            
            **2005**Income
                tax computed at the federal statutory rate
            
            
            34
            %
            
            34
            %State
                income tax, net of federal tax benefit
            
            
            4
            %
            
            4
            %Total
            
            
            38
            %
            
            38
            %Valuation
                allowance
            
            
            -38
            %
            
            -38
            %Total
                deferred tax asset
            
            
            0
            %
            
            0
            %







Because
      of the Company’s lack of earnings history, the deferred tax asset has been fully
      offset by a valuation allowance. The valuation allowance increased (decreased)
      by $314,000 and $447,000 in 2006 and 2005, respectively. No tax benefits have
      been recorded for the nondeductible (tax) expenses (stock for services) totaling
      $5,467,379.





The
      Company has the following carry-forwards available at December 31,
      2006:




**Amount**
              
              **Expiration**$
              729,624
              
              
              202251,002
              
              
              2023577,196
              
              
              20241,176,315
              
              
              2025826,705
              
              
              2026$
              3,360,842




**NOTE
      D—INSURANCE PROCEEDS AND RELATED ACCOUNTS RECEIVABLE**





In
      November 2006, the Company realized $500,000 in insurance proceeds payment
      as a
      result of the death of Robert V. McLemore, former President and founder of
      the
      Company. The payment was not received in 2006, so the Company booked an Accounts
      Receivable as the offset to the income realized. The cash payment was received
      in January 2007.





**NOTE
      E—SEGMENT REPORTING**





In
      June
      1997, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 131, *“Disclosures
      about Segments of an Enterprise and Related Information.”* This
      statement requires companies to report information about operating segments
      in
      interim and annual consolidated financial statements. It also requires segment
      disclosures about products and services, geographic areas and major customers.
      The Company determined that it did not have any separately reportable operating
      segments as of December 31, 2006 and 2005.





-
          13
          -





**NOTE
      F—EQUITY**





During
      2005, the Company issued 8,125,652 shares of its 100,000,000 authorized, $.001
      par Common Stock for various services, valued at $5,151,871. During 2006, the
      Company issued 6,183,992 shares of its 100,000,000 authorized, $.001 par Common
      Stock for various services, additions to Capitalized Software, and debt
      converted to equity, valued at $2,157,785. In addition, the Company issued
      800,000 shares of its 800,000 authorized, $.001 par stock Class B Preferred
      Stock for various services to 2 major shareholders, valued at
      $2,000,000.





The
      following provides details of the restricted stock transactions for various
      services, additions to capitalized software and debt converted to equity. These
      transactions have been recorded according to FAS 123R.




**RESTRICTED
        SHARES**


Closing
                  Price onIssue
                  Date
              
              Value
                  of
              
              Basis
                  forDate
                  Issued
              
              
              
              Recipient
              
              #
                  Shares
              
              Yahoo!
                  Finance
              
              ****Transaction
              
              Valuation7/3/2007
              
              (i)
              
              M.
                  Smith
              
              131,420
              
              0.15
              
              19,700
              
              Share price8/16/2007
              
              (j)
              
              K.
                  Michno
              
              68,608
              
              0.18
              
              12,500
              
              Value of Services9/19/2007
              
              (k)
              
              J.
                  O'Connor
              
              41,667
              
              0.15
              
              6,250
              
              Value of Services9/19/2007
              
              (k)
              
              E.
                  McLemore
              
              41,667
              
              0.15
              
              6,250
              
              Value of Services9/19/2007
              
              (k)
              
              D.
                  Fogel
              
              41,667
              
              0.15
              
              6,250
              
              Value of Services9/19/2007
              
              (k)
              
              R.
                  Burroughs
              
              41,667
              
              0.15
              
              6,250
              
              Value of ServicesShares
                    Issued:
              
              366,696
              
              Quarter
                    Total:
              
              57,200


(i)-Shares
        due for prior services to the company (2001-2004)
 (j)
        IR/Consulting expense for Karen Michno for quarter
 (k)-Director
        payment for 3rd quarter, 2007


The
      following provides details of the S-8 stock transactions for various services
      and additions to capitalized software. These transactions have been recorded
      according to FAS 123R. Whenever possible the Company has used the valuation
      of
      services provided and then calculated the number of shares associated with
      this
      valuation. Occasionally it is not possible to get an exact value of services
      provided and the value of the stock becomes a fair and reasonable estimate
      of
      that value.


**FREE
        TRADING STOCK**


Closing
                  Price onExpense/
              
              
              
              
              
              Issue
                  Date
              
              Value
                  of
              
              Basis
                  forDate
                  Issued
              
              Capital
              
              Recipient
              
              #
                  Shares
              
              Yahoo!
                  Finance
              
              Transaction
              
              Valuation8/2/2007
              
              Exp
              
              G.
                  Wessling
              
              857,837
              
              0.164
              
              140,854
              
              Value of Services8/2/2007
              
              Exp
              
              C.
                  Carriker
              
              76,563
              
              0.160
              
              12,250
              
              Value of Services8/2/2007
              
              Exp
              
              G.
                  Neerings
              
              78,125
              
              0.160
              
              12,500
              
              Value of Services8/2/2007
              
              Exp
              
              R.
                  von Gnechten
              
              105,760
              
              0.164
              
              17,316
              
              Value of Services9/20/2007
              
              Exp
              
              H.
                  Martin
              
              10,526
              
              0.190
              
              2,000
              
              Value of Services9/28/2007
              
              Exp
              
              R.
                  V. McLemore Estate
              
              760,893
              
              0.135
              
              102,500
              
              Value of ContractShares
                    Issued:
              
              1,889,704
              
              Quarter
                  Total:
              
              287,420




**CONVERTIBLE
      PREFERRED STOCK**





As
      of the
      end of the fiscal quarter ended September 30, 2007, we had three authorized
      and
      outstanding series of Convertible Preferred Stock, as follows: (i) 1,000,000
      shares of issued and outstanding Class A Voting Convertible Preferred Stock;
      (ii) 800,000 shares of issued and outstanding Class B Voting Convertible
      Preferred Stock; and (iii) 700,000 shares of issued and outstanding Class C
      Voting Convertible Preferred Stock. The terms and conditions of each series
      of
      Convertible Preferred Stock are as follows:




-
          14
          -




1.
            **Class
                A Voting Convertible Preferred Stock, $.001 par value**–
                Each share
                of the 1,000,000 issued and outstanding shares of Class A Voting
                Preferred
                Stock (the “Class A Preferred Stock”) is convertible, at the option of the
                holder, at any time after five years from the date of issuance thereof,
                into ten (10) shares of fully paid and non-assessable shares of common
                stock. The holders are not entitled to receive any dividend on the
                shares
                of Class A Preferred Stock. The holders are entitled to a liquidation
                preference in the amount of $1.00 per share of Class A Preferred
                Stock.
                The holders of Class A Preferred Stock are entitled to a class vote
                on any
                merger, sale of assets, combination or reorganization involving the
                corporation, or other fundamental corporation transaction involving
                the
                corporation, with the holders of Class A Preferred Stock having one
                vote
                per share. On all other matters, the Class A Preferred Stock votes
                with
                the common stockholders as one combined class, with the holders of
                the
                Class A Preferred Stock having ten (10) votes per share of such stock
                owned.. The corporation has agreed that it shall not, without the
                consent
                of the majority of the holders of Class A Preferred Stock: 1) take
                any
                action which would either alter, change or affect the rights, preferences,
                privileges or restrictions of the Class A Preferred Stock or increase
                the
                number of shares of such series or designate any other series of
                Preferred
                Stock; 2) increase the size of any equity incentive plan(s) or
                arrangements; 3) make fundamental changes to the business of the
                corporation; 4) make any changes to the terms of the Class A Preferred
                Stock or to the corporation’s articles of incorporation or By-Laws,
                including by designation of any stock; 5) create any new class of
                shares
                having preferences over or being on a parity with the Class A Preferred
                Stock as to dividends or assets, subject to certain exceptions; 6)
                accrue
                any indebtedness in excess of $20,000,000; 7) make any change in
                the size
                or number of authorized directors; 8) repurchase any of the corporation’s
                common stock; 9) sell, convey or otherwise dispose of, or create
                or incur
                any mortgage, lien, charge or encumbrance on or security interest
                in or
                pledge of, or sell or lease back, all or substantially all of the
                property
                or business of the corporation or more than 50% of the stock of the
                corporation; 10) make any payment of dividends or other distributions
                or
                any redemption or repurchase of common stock or options or warrants
                to
                purchase common stock of the corporation or 11) make any sale of
                additional Class A Preferred Stock. Finally, the holders of Class
                A
                Preferred Stock and common stock voting together on combined class
                shall
                be entitled to elect the directors comprising the Board of Directors
                (and
                to fill any vacancies with respect thereto). Waivers of these covenants
                have been routinely granted, inasmuch as Robert V. McLemore, the
                late
                President of the corporation, and the Robert V. McLemore Family Trust,
                together own 612,123 shares of Class A Preferred Stock, representing
                61.2%
                of the outstanding shares.




2.
            **Class
                B Voting Convertible Preferred Stock, $.001 par value**–
                Each share of the 800,000 issued and outstanding shares of Class
                B Voting
                Preferred Stock (the “Class B Preferred Stock”) is convertible, at the
                option of the holder, at any time after three years from the date
                of
                issuance thereof, into ten (10) shares of fully paid and non-assessable
                shares of common stock. The holders are not entitled to receive any
                dividend on the shares of Class B Preferred Stock. The holders are
                entitled to a liquidation preference in the amount of $1.00 per share
                of
                Class B Preferred Stock. The holders of Class B Preferred Stock are
                entitled to a class vote on any merger, sale of assets, combination
                or
                reorganization involving the corporation, or other fundamental corporation
                transaction involving the corporation, with the holders of Class
                B
                Preferred Stock having one vote per share. On all other matters,
                the Class
                B Preferred Stock votes with the common stockholders as one combined
                class, with the holders of the Class B Preferred Stock having ten
                (10)
                votes per share of such stock owned.. The corporation has agreed
                that it
                shall not, without the consent of the majority of the holders of
                Class B
                Preferred Stock: 1) take any action which would either alter, change
                or
                affect the rights, preferences, privileges or restrictions of the
                Class B
                Preferred Stock or increase the number of shares of such series or
                designate any other series of Preferred Stock; 2) make fundamental
                changes
                to the business of the corporation; 3) make any changes to the terms
                of
                the Class B Preferred Stock or to the corporation’s articles of
                incorporation or By-Laws, including by designation of any stock;
                4) create
                any new class of shares having preferences over or being on a parity
                with
                the Class B Preferred Stock as to dividends or assets, subject to
                certain
                exceptions; 5) accrue any indebtedness in excess of $30,000,000;
                6)
                repurchase any of the corporation’s common stock; 7) sell, convey or
                otherwise dispose of, or create or incur any mortgage, lien, charge
                or
                encumbrance on or security interest in or pledge of, or sell or lease
                back, all or substantially all of the property or business of the
                corporation or more than 50% of the stock of the corporation; 8)
                make any
                sale of additional Class B Preferred Stock. Finally, the holders of Class
                B Preferred Stock and common stock voting together on combined class
                shall
                be entitled to elect the directors comprising the Board of Directors
                (and
                to fill any vacancies with respect thereto). Waivers of these covenants
                have been routinely granted, inasmuch as Robert V. McLemore, the
                late
                President of the corporation, and Gregory J. Wessling, the Chairman
                and
                CEO of the corporation, together own 700,000 shares of the Class
                B
                Preferred Stock, representing 87.5% of the outstanding
                shares.





3.
            **Class
                C Voting Convertible Preferred Stock, $.001 par value**–
                Each share of the 700,000 issued and outstanding shares of Class
                C Voting
                Preferred Stock (the “Class C Preferred Stock”) is convertible, at the
                option of the holder, at any time after three years from the date
                of
                issuance thereof, into ten (10) shares of fully paid and non-assessable
                shares of common stock. The holders are not entitled to receive any
                dividend on the shares of Class C Preferred Stock. The holders are
                entitled to a liquidation preference in the amount of $1.00 per share
                of
                Class C Preferred Stock. The holders of Class C Preferred Stock are
                entitled to a class vote on any merger, sale of assets, combination
                or
                reorganization involving the corporation, or other fundamental corporation
                transaction involving the corporation, with the holders of Class
                C
                Preferred Stock having one vote per share. On all other matters,
                the Class
                C Preferred Stock votes with the common stockholders as one combined
                class, with the holders of the Class C Preferred Stock having ten
                (10)
                votes per share of such stock owned. The corporation has agreed that
                it
                shall not, without the consent of the majority of the holders of
                Class C
                Preferred Stock: 1) take any action which would either alter, change
                or
                affect the rights, preferences, privileges or restrictions of the
                Class C
                Preferred Stock or increase the number of shares of such series or
                designate any other series of Preferred Stock; 2) make fundamental
                changes
                to the business of the corporation; 3) make any changes to the terms
                of
                the Class C Preferred Stock or to the corporation’s articles of
                incorporation or By-Laws, including by designation of any stock;
                4) create
                any new class of shares having preferences over or being on a parity
                with
                the Class C Preferred Stock as to dividends or assets, subject to
                certain
                exceptions; 5) accrue any indebtedness in excess of $30,000,000;
                6)
                repurchase any of the corporation’s common stock; 7) sell, convey or
                otherwise dispose of, or create or incur any mortgage, lien, charge
                or
                encumbrance on or security interest in or pledge of, or sell or lease
                back, all or substantially all of the property or business of the
                corporation or more than 50% of the stock of the corporation; 8)
                make any
                payment of dividends or other distributions or any redemption or
                repurchase of common stock or options or warrants to purchase common
                stock
                of the corporation; or 9) make any sale of additional Class C Preferred
                Stock. Finally, the holders of Class C Preferred Stock and common
                stock
                voting together on combined class shall be entitled to elect the
                directors
                comprising the Board of Directors (and to fill any vacancies with
                respect
                thereto). Waivers of these covenants have been routinely granted,
                inasmuch
                as Gregory J. Wessling, Chairman, CEO and President of the corporation
                owns 500,000 shares of Class C Preferred Stock, representing 71.4%
                of the
                issued and outstanding shares.




-
          15
          -




**NOTE
      G—WARRANTS**





The
      following table shows warrants that have been issued by the
      Company:





**#
                shares**
            
            **Price
                per Share**
            
            **Exercise
                Date**
            
            **Expiration
                Date****PPM
                warrants****Issued:**500,000
            
            $
            0.50
            
            
            08/18/06
            
            
            08/18/10250,000
            
            $
            0.50
            
            
            09/09/06
            
            
            09/09/10190,000
            
            $
            0.50
            
            
            03/17/07
            
            
            03/17/1275,000
            
            $
            0.50
            
            
            03/14/07
            
            
            03/14/11100,000
            
            $
            0.50
            
            
            03/14/07
            
            
            04/30/1160,000
            
            $
            0.50
            
            
            03/23/07
            
            
            03/23/11100,000
            
            $
            0.50
            
            
            04/20/07
            
            
            04/20/11226,892
            
            $
            0.50
            
            
            05/15/07
            
            
            05/15/11500,000
            
            $
            0.50
            
            
            06/19/07
            
            
            06/19/11200,000
            
            $
            0.50
            
            
            01/08/08
            
            
            01/08/12**2,201,892****Various
                warrants****Issued:**300,000
            
            $
            0.90
            
            
            05/13/05
            
            
            05/13/0920,000
            
            $
            0.50
            
            
            06/13/05
            
            
            06/13/10750,000
            
            $
            0.50
            
            
            06/23/06
            
            
            06/23/16750,000
            
            $
            0.50
            
            
            06/23/07
            
            
            06/23/17750,000
            
            $
            0.50
            
            
            06/23/08
            
            
            06/23/18750,000
            
            $
            0.50
            
            
            06/23/09
            
            
            06/23/1920,000
            
            $
            0.60
            
            
            07/13/05
            
            
            07/13/09950,000
            
            $
            0.90
            
            
            05/13/05
            
            
            05/13/102,584
            
            $
            1.24
            
            
            04/15/05
            
            
            04/15/102,584
            
            $
            1.24
            
            
            04/15/05
            
            
            04/15/106,000
            
            $
            1.24
            
            
            03/04/05
            
            
            03/04/106,000
            
            $
            1.24
            
            
            03/04/05
            
            
            03/04/1050,000
            
            $
            0.50
            
            
            01/01/07
            
            
            01/01/1750,000
            
            $
            0.50
            
            
            01/01/07
            
            
            01/01/1750,000
            
            $
            0.50
            
            
            01/01/07
            
            
            01/01/1750,000
            
            $
            0.50
            
            
            01/01/07
            
            
            01/01/17**4,507,168**




-
          16
          -




**NOTE
      G—WARRANTS (CONT’D)**





The
      following table shows the future warrants to consultants, independent
      contractors and employees that the Company will issue as of
      9/30/07:





**#
                shares**
            
            **Price
                perShare**
            
            **Exercise Date**
            
            **Expiration**
              **Date**
            
            **VestingTerm(yrs)**
            
            **Warrantsvesting
                per year**
            
            **WarrantsVested
                asof**
              **12/31/06**
            
            **WarrantsVesting
                asof**
              **9/30/07**300,000
            
            $1.00
            
            01/08/03
            
            01/08/08
            
            5
            
            60,000
            
            240,000
            
            0100,000
            
            $0.50
            
            04/19/04
            
            04/19/09
            
            5
            
            20,000
            
            40,000
            
            20,000100,000
            
            $1.50
            
            11/01/04
            
            11/01/09
            
            5
            
            20,000
            
            40,000
            
            0100,000
            
            $1.50
            
            11/01/04
            
            11/01/09
            
            5
            
            20,000
            
            40,000
            
            05,000
            
            $1.24
            
            03/04/05
            
            03/04/10
            
            5
            
            1,000
            
            1,000
            
            1,0005,000,000
            
            $0.50
            
            Special
            
            06/23/15
            
            4
            
            1,250,000
            
            1,250,000
            
            05,000,000
            
            $0.50
            
            Special
            
            09/01/14
            
            4
            
            1,250,000
            
            1,250,000
            
            0500,000
            
            $1.75
            
            04/07/05
            
            04/07/15
            
            5
            
            100,000
            
            100,000
            
            100,000833,333
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            2
            
            --
            
            833,333
            
            02,000,000
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            3
            
            666,667
            
            0
            
            0800,000
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            2
            
            --
            
            800,000
            
            01,200,000
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            3
            
            400,000
            
            0
            
            0400,000
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            2
            
            --
            
            400,000
            
            01,200,000
            
            $0.50
            
            02/01/07
            
            02/01/17
            
            3
            
            400,000
            
            0
            
            080,000
            
            $0.50
            
            10/31/05
            
            10/31/15
            
            5
            
            16,000
            
            16,000
            
            0200,000
            
            $0.50
            
            01/03/05
            
            01/13/15
            
            5
            
            40,000
            
            40,000
            
            40,00025,000
            
            $0.50
            
            01/01/05
            
            01/01/15
            
            5
            
            5,000
            
            10,000
            
            025,000
            
            $1.00
            
            01/01/05
            
            01/01/15
            
            5
            
            5,000
            
            10,000
            
            0250,000
            
            $0.50
            
            01/01/05
            
            01/01/15
            
            5
            
            50,000
            
            100,000
            
            0250,000
            
            $1.00
            
            01/01/05
            
            01/01/15
            
            5
            
            50,000
            
            100,000
            
            0100,000
            
            $0.50
            
            01/01/05
            
            01/01/15
            
            5
            
            --
            
            100,000
            
            0100,000
            
            $1.00
            
            01/01/05
            
            01/01/15
            
            5
            
            --
            
            100,000
            
            050,000
            
            $0.50
            
            08/01/06
            
            08/01/16
            
            5
            
            --
            
            0
            
            50,000200,000
            
            $0.50
            
            05/08/06
            
            05/08/16
            
            4
            
            50,000
            
            0
            
            50,00030,000
            
            $1.20
            
            2003
            
            N/A
            
            5
            
            --
            
            30,000
            
            0250,000
            
            $0.50
            
            11/08/06
            
            11/08/16
            
            5
            
            50,000
            
            0
            
            0100,000
            
            $0.50
            
            01/02/07
            
            01/02/17
            
            5
            
            20,000
            
            0
            
            0500,000
            
            $0.50
            
            01/02/07
            
            01/02/17
            
            5
            
            100,000
            
            0
            
            0200,000
            
            $0.50
            
            12/02/06
            
            12/02/16
            
            5
            
            40,000
            
            0
            
            010,000
            
            N/A
            
            12/02/06
            
            12/02/16
            
            5
            
            2,000
            
            0
            
            0**19,908,333**
            
            
            
            
            
            
            
            
            
            
            
            **5,500,333**
            
            **261,000**





The
      fair
      value of each award is estimated on the date of vesting using the Black-Scholes
      option valuation model which uses the principal assumptions: expected volatility
      of 7%, expected dividends of 0%, expected terms of 10 years and risk-free
      interest rate of 4.5%. The expected volatility rate was estimated based on
      the
      daily historical volatility of the Company’s common stock over the previous 12
      month period. The expected term was estimated based on a simplified method,
      as
      allowed under SEC Staff Accounting Bulletin No. 107, averaging the vesting
      term
      and original contractual terms. The risk-free interest rate for periods within
      the contractual life of the option is based on U.S. Treasury securities. The
      pre-vesting forfeiture rate used for the period ended September 30, 2007 was
      assumed to be zero. As required under SFAS No. 123(R), we will adjust the
      estimated forfeiture rate to our actual experience. Management will continue
      to
      assess the assumptions and methodologies used to calculate estimated fair value
      of share-based compensation. Circumstances may change and additional data may
      become available over time, which could result in changes to these assumptions
      and methodologies, and thereby materially impact our fair value
      determination.




-
          17
          -





**NOTE
      H—NON-QUALIFIED
      STOCK COMPENSATION PLAN**





On
      July
      13, 2007, the Company adopted a 2007 Non-qualified Stock Compensation Plan
      (Stock Plan) where the Company may compensate key employees, advisors, and
      consultants by issuing them shares of its capital stock or options to purchase
      shares of its capital stock in exchange for services rendered and to be rendered
      and thereby conserve the Company’s cash resources. The Company has reserved
      3,500,000 shares of its $.001 par value Common Stock for these purposes. The
      Stock Plan will not exceed 30% of its outstanding common stock at any given
      time.





**NOTE
      I—COMMITMENTS/LEASES**





On
      November 1, 2005, HouseRaising entered into a Lease Agreement, extendable by
      the
      Company, whereby the Company agreed to lease the entire second floor at
      Independence Tower (approximately 11,000 square feet) located at 4801 E.
      Independence Boulevard, Charlotte, NC for an annual rent obligation of
      approximately $100,000. HouseRaising will utilize this additional space for
      estimators and designers recruited to support the Company’s Gulf Coast
      initiative and a sales and product display center to support operations in
      North
      and South Carolina. The space will continue to serve as corporate headquarters
      for HouseRaising, Inc. and HouseRaisingAcademy, which include the Company’s
      consolidation of its acquisition of LearnBytes, LLC, and the operations of
      HouseRaisingUSA, LLC (and its various subsidiaries), HouseRaisingMembership,
      LLC, HouseRaising Disaster Relief, LLC and HouseRaisingRealty, LLC.





On
      November 27, 2006, HouseRaising of the Gulf Coast, LLC (“HR-Gulf Coast”), a
      subsidiary of HouseRaising, Inc., entered into a Lease Agreement with CSC
      Investments, LLC whereby HR-Gulf Coast agreed to lease space at 4024 and 4030
      (A-C) Canal Street, New Orleans, Louisiana to accommodate the Company’s new
      design center and continue its expansion efforts for its Gulf Coast operations
      in New Orleans. The Company entered into a five year agreement, commencing
      December 1, 2006 and expiring November 30, 2011 with a five year option to
      lease
      approximately 10,000 square feet for an annual rent of approximately $144,000.
      After the 36 th month of
      the lease, the Landlord can increase rent up to 2% annually. The Company will
      utilize this space for sales and product design center to support building
      and
      disaster relief operations in Louisiana, and provide space for builders,
      estimators and designers recruited to support the Company’s Gulf Coast
      operations. HouseRaising of the Gulf Coast, LLC also has established a small
      business office location in Gulfport, MS.





In
      December 2005, the Company entered into a lease agreement for computer
      equipment. The monthly payments are $2,298.75 per month for 48 months starting
      June, 2006. In October 2005, the Company entered into a lease agreement for
      computer hardware and software. The monthly payments are $560.68 per month
      for
      24 months beginning December, 2005. In September 2005, the Company entered
      into
      a lease agreement for computer hardware and software. The monthly payments
      are
      $248.53 per month for 24 months beginning November, 2005. In May, 2006, the
      company entered into a lease agreement for computer hardware and software.
      The
      monthly payments are $121.00 per month for 48 months beginning June,
      2006.





Future
      minimum rental payments as of December 31, 2006 are as follows:




Year
                ending December 31:2007
            
            $
            281,6902008
            
            
            273,0372009
            
            
            273,2772010
            
            
            264,3362011
            
            
            240,080$
            1,332,419





**NOTE
      J—NOTES PAYABLE**





**Notes
      payable at September 30, 2007 consist of the
      following:**


Unsecured
                  note payable to an unrelated party.Bearing
                  8% interest.
              
              $
              5,640Unsecured
                  note payable to an unrelated party.Bearing
                  8% interest.
              
              $
              13,177




-
          18
          -




**NOTE
      J—NOTES PAYABLE (CONT’D)**





Unsecured
                note payable to an unrelated party.Bearing
                0% interest.
            
            $
            1,851
            **Total
                Current Portion
            
            $
            20,668





**
      On the
      0% interest bearing notes, the Company imputed interest on the notes using
      a
      rate of 6%. The effects of these notes are included in the consolidated
      financial statements therein.





In
      February, 2007 the Company came to a debt to equity conversion agreement with
      its final bridge lender, which resulted in the issuance of 424,801 shares of
      common stock in exchange for a reduction of $212,401 in bridge loans and
      accumulated interest which eliminated the Secured note payable to an unrelated
      party in the amount of $155,000 bearing an interest rate of 15%.





**NOTE
      K—LINE OF CREDIT**





The
      Company has five separate lines of credit with Wachovia Bank, NA which total
      $8,100,000. The Company obtained a line of credit in the amount of $1,350,000
      with Wachovia Bank, NA. The interest rate on the line of credit is equal to
      1-month LIBOR plus 2.75%. All interest and principal are due on demand. In
      addition, the Company obtained an annually renewable line of credit in the
      amount of $4,000,000 with Wachovia Bank, NA with an interest rate of 1-month
      LIBOR plus 1.55% with a no-call provision and with all interest and principal
      due on February 8, 2008. In addition, the Company obtained an annually renewable
      line of credit in the amount of $1,000,000 with Wachovia Bank, NA with an
      interest rate equal to 1-month LIBOR plus 2.50% with all interest and principal
      due on May 31, 2008. In addition, the Company obtained an annually renewable
      line of credit in the amount of $500,000 with Wachovia Bank, NA with an interest
      rate of 1-month LIBOR plus 2.35% with all interest and principal due on July
      31,
      2008. In addition, the Company obtained an annually renewable line of credit
      in
      the amount of $1,250,000 with Wachovia Bank, NA with an interest rate of 1-month
      LIBOR plus 2.35% with all interest and principal due on September 30, 2007,
      which is in the process of being extended for an additional year. The Company’s
      total Line of Credit outstanding as of September 30, 2007 was
      $7,260,109.





**NOTE
      L—NET LOSS PER COMMON SHARE**





The
      Company’s reconciliation of the numerators and denominators of the basic and
      fully diluted loss per share is as follows:








**For the Year Ended December 31, 2006**
            
            **For the Year Ended December 31, 2005****Income**
            
            **Shares**
            
            **Per-Share**
            
            **Income**
            
            **Shares**
            
            **Per-Share****(Numerator)**
            
            **(Denominator)**
            
            **Amount**
            
            **(Numerator)**
            
            **(Denominator)**
            
            **Amount****Net
                Income/(Loss)**
            
            $
            (2,999,358
            )
            
            
            
            
            
            
            $
            (4,120,994
            )**Basic
                EPS**Income
                available to common stockholders
            
            
            (2,999,358
            )
            
            48,183,225
            
            $
            (0.06
            )
            
            (4,120,994
            )
            
            40,467,025
            
            $
            (0.10
            )**Effect
                of Dilutive Securities**Warrants
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -Convertible
                preferred stock
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -**Diluted
                EPS**Net
                Income/(Loss)
            
            $
            (2,999,358
            )
            
            48,183,225
            
            $
            (0.06
            )
            $
            (4,120,994
            )
            
            40,467,025
            
            $
            (0.10
            )




-
          19
          -




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
      OPERATIONS.**





**Management’s
      Discussion and Analysis of Financial Condition and Results of Operations for
      September 30, 2007**





*(The
      following discussion should be read in conjunction with the Financial Statements
      and related notes thereto included elsewhere in this section.)*





**HIGHLIGHTS
      OF RECENT ACTIVITIES**





·
            On
                October 30, 2007, the Company entered into a material agreement to
                recapitalize the company through an agreement to repurchase a total
                25,777,286 shares of restricted common stock of the Company in a
                private
                transaction subject to the approval of the Mecklenburg County Clerk
                of
                Courts (due to the involvement of the Estate of Robert V. McLemore).
                This
                transaction represents approximately 45.8% of the 56,251,897 issued
                and
                outstanding shares of common stock as of September 30, 2007 (see
                Part II,
                Item II Changes in Securities).





·
            Signed
                agreements to build and develop approximately $24.8 million in new
                homes
                and remodeling contracts expected to be built over the next 12-24
                months,
                which is $19.7 million higher than a year ago and $18.8 million higher
                than year-end.


·
            Signed
                agreements for $8.5 million in 21 new homes and 6 remodeling contracts
                to
                be built over the next 12 months;


·
            Signed
                development agreement that will generate approximately $16.3 million
                in
                new home construction (see Part II, Item 5 Other Matters) and realty
                sales
                commissions on 31 single family
                homes.





·
            Total
                revenues of $1.64 million and gross margin of $360,000 compared to
                total
                revenues of $800,000 and gross margin of $85,000 last
                year.


·
              HouseRaisingRealty,
                  LLC closed sales transactions of almost $4.0 million generating
                  $104,000
                  in new revenues for the quarter and almost $8.7 million year-to-date
                  generating $224,000 in new revenues for the year. After the end
                  of the
                  quarter and as of the filing of this report, HouseRaisingRealty
                  has:
 o
              Closed
                  additional sales transactions of $1.55 million generating $41,000
                  in
                  commission income;
 o
              Pending
                  sales transactions totaling $2.6 million which will generate approximately
                  $92,000 in commission income;
 o
              Active
                  listings for sales of approximately $3.4 million.
 o
              Establishing
                  a new office in Brunswick County, North
                  Carolina.
 
 ·
              The
                  company is fully operational in the Gulf Coast, having leased and
                  built
                  out 10,000 square feet for the New Orleans Design Center/Offices
                  and
                  secured its builder’s license.
 
 ·
              As
                  a result of the company fully implementing its Capitalized System
                  (System-C), the Company started depreciating the system in 2007.
                  As of the
                  3rdquarter, the Company commenced expensing all information technology
                  resources which were previously capitalized. The Company has accrued
                  approximately $750,000 in depreciation for the year.


**As
                  of November 14, 2007**
              
              **As
                  of November 14, 2006****Total
                  Revenues**
              
              $1,641,848
              
              $798,971**Gross
                  Margin**
              
              360,565
              
              85,544**HouseRaising
                  Zone Operations**Total
                  Revenues from closed contracts
              
              $1,410,513
                  (9-30-07)
              
              $793,443
                  (9-30-06)Total
                  Revenue from service fees
              
              $239,850
                  (9-30-07)
              
              $156,652
                  (9-30-06)Number
                  of contracts closed
              
              4
              
              5Signed
                  contracts (new, remodel &development)
              
              $24.8
                  million21
                  new, 6 remodel, 31 development
              
              $5.1
                  million**HouseRaisingRealty**Realty
                  Income (commissions)
              
              $224,630
                  (9-30-07)
              
              0
                  (9-30-06)Closed
                  sales transactions thru 9/30/07
              
              $8,697,082
                  (9-30-07)
              
              0
                  (9-30-06)Closed
                  transactions since 9/30/07
              
              $1,550,358
                  (~$41k commissions)
              
              0
                  (0)Pending
                  sales transactions
              
              $2.6
                  million (~$92k commissions)
              
              0
                  (0)Active
                  listings
              
              $3.4
                  million
              
              0




-
          20
          -


**EXECUTIVE
      OVERVIEW & STRATEGY**





HouseRaising,
      Inc. is in the business of selling, designing, building and managing
      design/build and renovation projects in the residential homebuilding market
      for
      homebuyers and homebuilders. HouseRaising’s core business is to create revenues
      and profits by building and constructing design/build custom residential homes
      and remodels through use of its proprietary software functioning exclusively
      within the custom homebuilding arena. The Company owns a proprietary invention
      created to alter and improve the way custom homes are designed and built. The
      invention has been developed into internal-use software. This management
      software is used as a tool to define 3,400 tasks in the designing and building
      process and as a school to cause precise steps to be performed in each task.
      In
      early 2005, the company filed US and International patent applications on its
      invention and started producing revenues utilizing the software in
      2006.





On
      February 19, 2004, HouseRaising executed an Agreement and Plan of Merger (“the
      Merger”) to which HRI agree d
      to
      merge with and into Technology Connections, Inc. This transaction was structured
      as a reverse acquisition whereby the existing shareholders of HouseRaising
      obtained control of Technology Connections, Inc. and the resulting entity agreed
      to change its name to HouseRaising, Inc. On August 31, 2004, the Merger was
      consummated when Articles of Merger were filed by the parties with the Secretary
      of State of North Carolina. The end result was that HRI became a publicly traded
      company quoted on the Over-the-Counter Bulletin Board.





HouseRaising’s
      principal focus is implementing its business plan. Beginning in 2004,
      HouseRaising commenced sales of new home and renovation projects utilizing
      a
      manual version of the system through an operating subsidiary which confirmed
      its
      business model. In 2005, the Company focused its attention on completing its
      management software system, starting to use the system to manage new home and
      renovation projects and develop an operating team to implement its business
      plan.





In
      2006,
      the Company commenced rolling out its Custom Homebuilding Operations in the
      Carolinas and Gulf Coast region, started marketing Builder memberships and
      affiliated services. In addition, the Company customized a version of its
      software to facilitate managing disaster relief projects for the Gulf Coast
      region. The Company has established offices in Gulfport, Mississippi and New
      Orleans, Louisiana, where it has built out a design center and engaged
      executives to implement its programs in this region. In late 2006, the Company
      formed a real estate brokerage operation to help customers sell their home
      and
      purchase a lot to build a new home. The Company is establishing another realty
      office in Brunswick, North Carolina. The Company is rapidly increasing home
      sales in the Carolinas and Gulf Coast region and has signed homebuilder
      agreements with experienced homebuilders which are expected to increase custom
      home sales in these regions.





**How
      We Do It:**





HouseRaising
      was created to take advantage of the invention its founder designed to
      revolutionize the way custom homebuilding conducts business. Custom homebuilding
      is where homeowners purchase a lot and later design and build their dream home
      utilizing custom builders. It is generally accepted that about 9 out of every
      10
      companies that build custom homes eventually suffer financial losses and most
      of
      them fail. It is also commonly known that most homebuyers call the custom
      homebuilding experience a nightmare. Despite these terrible statistics, over
      500,000 families design and build custom homes each year, selecting a builder
      from a pool of approximately 250,000 builders nationally.





The
      old
      way homebuilders and buyers operate within the design/build industry is flawed.
      Extensive research into the design build industry has exposed that during the
      designing and building stages, each and every custom home project confronts
      1,269 critical problem points. HouseRaising owns these proprietary research
      materials. The issue is that builders and buyers are not aware of the critical
      problem areas and thus do little to nothing to prepare for handling them.
      Operating independently and on their own, experience has shown that builders
      and
      homebuyers cannot effectively solve these problems.





At
      a cost
      of over $14 million, HouseRaising developed 4 decades and thousands of custom
      homebuilding experiences into a management system and support process. The
      HouseRaising system represents a tried and proven method that provides users
      a
      way to manage the 1,269 critical problem points and emotional issues faced
      in
      every design/build project. Regardless of the price, style or location of the
      home under contract, the management process is the same. Through contracts,
      forms, reports and online educational components, the software automatically
      assigns precise steps and procedures that each party will follow. The 3,400
      task
      process functions behind the scenes to address and solve issues that caused
      the
      problems, thus allowing homebuyers and builders to build homes in a financially
      sound manner and as an enjoyable experience. HouseRaising’s system helps
      builders and homebuyers work together to build a home without the normal
      misunderstandings and conflicts created by unaddressed problems.




-
          21
          -





**Customer
      Value Proposition:**





HouseRaising
      reduces the cost of unique homes through its patent-pending Design & Price
      ModuleTM and management system. Additional savings occur from HouseRaising’s
      network of affiliated vendors on the national, zone and local levels. By
      combining the needs of builders and homebuyers, HRI produces economies of scale
      that reduce direct and indirect costs of the project. Depending on the design
      structure selected by the homeowners, System C can lower the home’s total costs
      by up to 10%.





**HRI
        Revenue Streams:**
 
 Due
        to
        technological advantages designed into its software, HouseRaising is a
        multi-faceted company with operating revenues from four separate sources
        and
        marketing strategies. Each revenue source serves the design/build segment
        of the
        homebuilding industry.
 
 ***(1)
        Revenues from Custom Homebuilding Operations:*** Operating within zone territories through wholly-owned subsidiaries,
        HouseRaising creates revenues from building and managing custom home and
        renovation projects. Portions of those revenues come from design/build and
        renovation projects, where we earn profits as the builder of the home. In
        projects where we act as general manager of the project and not the builder,
        we
        earn a set fee for providing management services. In addition to the revenues
        described above, our management platform vendors provide technical services
        such
        as sales and design consulting, architectural services, vendor coordinating
        services, financing and cash flow management services and managing construction
        and closing related issues. These platform vendors are compensated separately
        and are direct costs to the project. In providing these in-house vendors,
        HouseRaising is able to improve the quality of those services at lower costs
        compared to outside vendors. The company has sales efforts underway in the
        Carolinas and the Gulf Coast. HouseRaising has identified an additional 30
        potential zone locations nationally. Revenues represent the sales price of
        these
        projects as completed. Operating outside of established zone territories,
        HouseRaising performs the role of general manager of projects and not the
        builder, collecting a few for management services provided.
 
 ***(2)
        Revenues from Realty Services:*** Operating within zone territories through a wholly-owned subsidiary,
        HouseRaisingRealty, LLC, HouseRaising provides complete real estate brokerage
        services to help customers sell their existing home and secure a vacant lot
        as
        necessary and then build a new home through other HRI subsidiaries.
        HouseRaisingRealty will generate additional income through commissions on
        such
        transactions.
 
 ***(3)
        Revenues from Disaster Relief Services:*** HouseRaising creates revenues by offering consulting services to governing
        agencies, as well as directly to families and builders involved in disaster
        rebuilding efforts, through a wholly-owned subsidiary,
        HouseRaisingDisasterRelief, LLC. For a fee, our consultants develop sketches
        of
        workable plans, create detailed specifications, determine new building code
        requirements and assist in arranging financing for rebuilding homes. It is
        expected that a percentage of the consulting engagements will then become
        custom
        homebuilding opportunities whereby HouseRaising either performs the role
        of
        general manager for a fee or actually builds the home with one of the Company’s
        builders. This revenue stream represents consulting fees and fees charged
        as a
        percentage of the sales price of the project.
 
 ***(4)
        Revenues from Builder-Memberships:*** HouseRaising creates revenues by offering membership opportunities to the
        approximate 250,000 licensed homebuilders operating in the United States
        through
        a wholly-owned subsidiary, HouseRaisingMembership, LLC. HouseRaising believes
        that 25,000 homebuilders could reasonably become members and benefit from
        educational materials and financial advantages. Members receive educational
        opportunities, cost savings and economies of scale created by HouseRaising’s
        vendor relationships. This Internet-based revenue stream represents the price
        builders pay HouseRaising for memberships.


**Market
      Potential:**





Management
      estimates that there is a substantial market for its design/build services,
      which will be accessed through its zone operations in the Carolinas and Gulf
      Coast and through affiliate relationships with builders who commit to conduct
      the business of building homes the HouseRaising way outside the zone
      territories. The design/build sector of the homebuilding market represents
      about
      500,000 of the 1.6 million single-family homes built annually in the U.S. While
      the total number of single-family homes does fluctuate year-to-year depending
      on
      economic conditions, the design/build sector has remained very stable. Of the
      500,000 custom-home projects built by approximately 250,000 small builders
      in
      America each year, every one of them could benefit from HouseRaising’s managed
      services. A 1% share of this market equals approximately $2.5 billion in home
      sales. HouseRaising’s software system was built to serve at least a 1% market
      share of custom home projects.




-
          22
          -


**Who
      Pays HRI?:**





HouseRaising
      creates revenues from building custom home and renovation projects. HRI is
      paid
      by the homebuyers as part of the total price of the design/build or renovation
      contract. All vendors operating in Management Platforms or providing products
      or
      services to the project are paid from the construction loan and down payment
      provided by homebuyers.




**HouseRaising’s
      trademark: “Straight, Level & Square®”:**





HouseRaising,
      Inc.’s trademark, “Straight, Level & Square®” stands for both the way the
      company deals with homebuyers, builders and vendors, and the quality of the
      products and services it provides. HouseRaising improves the quality of the
      home
      and provides better services. This combination reduces the cost of designing
      and
      building unique homes by up to 10%.





**Competition:**





The
      homebuilding business is highly competitive and fragmented. However,
      HouseRaising’s competition is not the large national homebuilders; we compete
      with the small craftsman or craftswoman builders that bid against other small
      builders for projects provided by customers. Currently, we know of no companies
      developing the type affiliations and support structure HouseRaising offers
      small
      builders.





**Regulation
      and Environmental Matters:**





Since
      HouseRaising does not develop subdivisions or communities, the company is less
      effected by environmental and regulation matters. We are subject to various
      local, state and federal statutes, ordinances, rules and regulations concerning
      zoning, building designs, construction and similar matters. In addition, we
      are
      subject to various licensing, registration and filing requirements in connection
      with construction, advertising and sale of design/build projects in our regional
      operations. We are also subject to a variety of local, state and federal
      statutes, ordinances, rules and regulations concerning protection of public
      health and the environment. We maintain a policy of engaging engineers and
      environmental consultants to evaluate certain sites located in environmental
      sensitive areas.





**Outlook
      for Homebuilding is Positive:**





The
      homebuilding industry has moderated the past couple years after enjoying record
      sales for close to a decade. The recent financial concerns with sub-prime
      mortgages have contributed to a national slow down in homebuilding.
      HouseRaising’s research indicates that despite the recent decline in home sales
      nationally, that the custom homebuilding sector of the industry has shown
      resilience in constructing about 500,000 homes a year regardless of whether
      or
      not the overall industry has gone up or down. The sub-prime mortgage crisis
      remains uncertain and could well impact these levels, although to this
      point the Company has not lost any contracts for this reason. It
      appears that the markets HouseRaising serve (namely, the Carolinas and the
      Gulf
      Coast) should remain strong for the foreseeable future.





**RESULTS
      OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2007**





**SALES
      AND COST OF SALES**





**Sales**





The
      Company had Sales (new home and renovation design/build sales) of $1,084,155
      for
      the three months ending September 30, 2007, compared to $282,477 for the same
      period in 2006. The s ales
      increase is principally due to the completion of a large new home project and
      service fees generated from new projects signed during the quarter compared
      to
      the same period in 2006. As of the filing of this report, the Company has new
      contracts (21 new home, 6 renovation and 31 development) totaling approximately
      $24,800,000 in sales that are projected to be completed over the next 12-24
      months, which reflects a $19,700,000 increase from the number reported in our
      Quarterly Report on 10-QSB for the period ending September 30, 2006 and reflects
      $18,800,000 increase from the Annual Report on 10-KSB for the period ending
      December 31, 2006. Included in these figures is a development contract the
      company signed in late July to build and sell approximately 31 new homes
      totaling approximately $16.3 million in revenue over the next 12-24 months
      (see
      Part II, Item 5 for details). All sales were from unrelated third parties and
      were made primarily to new home buyers and remodeling work.


-
          23
          -





Included
      in the sales are service fee revenues from pre-sold projects including interior
      design, architectural design fees, engineering fees, and a series of project
      coordinating expenses charged to each design/build project. These fees are
      built
      into the projects total price with Homebuyers paying these charges at the
      beginning of construction. The fees are a direct cost to the project. Going
      forward we would expect sales and service fee revenue to continue to grow
      commensurate with increases in new contract sales.





On
      average new home construction projects are completed within 9 months and
      remodeling projects are completed within 3 months. The Company reports sales
      based on the contract amount due for design and build projects in the quarter
      in
      which the sale is completed, closed and approved.





**Cost
      of Sales**





The
      cost
      of design/build sales represents all direct costs in building a new home or
      remodeling project, including sticks and bricks, labor and builder costs and
      management fees charged to the project (as described under sales and service
      fees above).





**Gross
      Profit**





HouseRaising’s
      gross profit represents the difference between Sales (including service fee
      revenue) and cost of sales. The Company earns profits as the net difference
      of
      project’s sales price and total costs including fees. Costs associated with
      in-house builder relationships are part of the projects total costs and
      HouseRaising’s profit is the difference in the sales price and all direct costs
      and fees. In a contract builder relationship the company shares profits with
      the
      builder, which is accounted for as a cost to the project.





HouseRaising’s
      gross profit was $84,356 for the three months ending September 30, 2007 compared
      to $10,122 for the same period in 2006 which reflects the completion of new
      home
      construction and remodeling projects and service fees generated from new
      projects signed during the quarter compared to the same period in 2006. The
      profit margin for the projects was approximately 8%. Management would expect
      the
      Company’s gross profits to grow as we obtain and complete new construction and
      remodeling work in the Carolinas and Gulf Coast in 2007 and continue the
      roll-out of the Company’s membership and new real estate brokerage
      operation.





**OTHER
      REVENUES**





The
      Company earned $ 104,126
      in other income for the period ending September 30, 2007, principally as a
      result of successfully launching HouseRaisingRealty, LLC to assist homebuyers
      in
      selling their existing homes or acquiring lots for their new custom homes and
      thus generating real estate commissions. The company closed real estate sales
      transactions of over $3,982,000 generating over $104,000 in new revenues for
      the
      third quarter versus none in the same period last year. As of the filing of
      this
      report and after quarter end, HouseRaisingRealty has closed additional sales
      transactions totaling over $1,550,000 which will generate approximately $41,000
      in commission income to be reported in the next quarter, pending sales
      transactions totaling $2,600,000 which will generate approximately $92,000
      in
      commission income to the Company, along with active listings for sale of
      $3,400,000. Management expects these sales levels to continue to increase as the company
      builds its brokerage operation.





The
      Company also receives marketing fees of approximately $12,000 a year from its
      contractual relationship with SunTrust Mortgage, although no income was
      generated in the current quarter.





A
      breakdown of Company revenue streams for the quarter ended September 30, 2007
      is
      provided below:


-
          24
          -




**HOUSERAISING
                REVENUE STREAM:**
            
            For Quarter
              Ending
              September 30, 2007
            
            For Quarter
              Ending
              September 30, 2006**Revenues
                from Custom Homebuilding Operations:**
            
            $
            1,084,155
            
            $
            282,477**Revenues
                from Realty Services:**
            
            
            104,126
            
            
            0**Revenues
                from Disaster Relief Services:**
            
            
            0
            
            
            0**Revenues
                from Builder-Memberships:**
            
            
            0
            
            
            0**Other
                Revenues (including co-branding agreements):**
            
            
            0
            
            
            5,528**TOTAL
                REVENUES**
            
            **$**
            1,189,281
            
            **$**
            288,005**Number
                of New Custom Homes Completed:**
            
            
            2
            
            
            0**Number
                of Remodeling Projects Completed:**
            
            
            0
            
            
            2


**EXPENSES**





Total
      expenses for the quarter ended
      September 30, 2007 was $1,772,765 compared to $1,449,991 for the same period
      in
      2006. The increase in expenses was due principally to the company implementing
      its business plan and incurring $229,000 in depreciation for its Capitalized
      Software (which reflects full-implementation of its System-C management system).
      The Company has expanded operations in the Carolinas (North and South Carolina),
      launched new operations in the Gulf Coast, launched new brokerage operations
      in
      the Carolinas and expanded its membership program which has attracted a
      substantial number of new builder relationships.





Selling,
      general and administrative expenses were higher for the three months ending
      September 30, 2007 versus 2006, increasing from $855,376 in 2006 to $1,063,468
      in 2007. These expenses reflect costs related to developing HouseRaising’s
      Carolinas and Gulf Coast zone operations, the Company’s realty brokerage
      operation, the Company membership program and disaster relief operations,
      including advertising, costs for personnel and contractors who are directly
      associated with and who devote time to selling, designing and building pre-sold
      homes and renovation projects in the Carolinas and Gulf Coast regions,
      commission sales personnel for its realty brokerage operation in the Carolinas
      and builder-memberships nationally and disaster relief services in the Gulf
      Coast region. These expenses also include general business and executive
      management services to raise capital for implementation of its business plan
      and
      previously committed payments for services provided to the company.





The
      company also paid a portion of its consulting, professional and salaries in
      stock-based compensation which decreased from $523,139 in the third quarter
      of
      2006 to $344,620 for the same period in 2007. This includes $108,333 as
      3/36 th amortization of stock compensation to a principal executive in exchange for
      a
      personal guarantee for three years with Wachovia that extended an additional
      $4
      million line of credit to the Company on February 9, 2007 as reported on SEC
      Form 8-K (as further described under Other Events in this filing). In addition,
      these expenses also include consulting fees for business consulting services
      and
      investor relations expenses.





The
      Company had depreciation expense in the amount of $250,584 in the third quarter
      of 2007 compared to 8,421 in 2006. The large increase from prior year reflects
      the company commencing depreciation on its Capitalized Software (System-C)
      at a
      rate of approximately $229,000 per quarter and an increase in the company’s
      investment in property and equipment, particularly its design center in
      Charlotte. The Company expects to depreciate the company’s System-C over a
      15-year period.





The
      Company had interest expense of $114,093 for the period ending September 30,
      2007 compared to $63,055 for the same period in 2006. The interest recorded
      in
      the third quarter was principally for the company’s line of credit with Wachovia
      Bank. The interest recorded in 2006 was principally to reimburse bridge lenders
      to HouseRaising. Going forward the level of interest expense will be based
      principally on the Wachovia line of credit drawn.





**INCOME
      / LOSSES**





The
      net
      loss for the quarter
      ended September 30, 2007 was $1,584,283 versus a net loss of $1,434,341 in
      the
      same period in 2006. The increase in net losses is directly attributable to
      commencing depreciation for its Capitalized Software (System-C) in the amount
      of
      $229,000 and fully implementing its business plan: expanding operations in
      the
      Carolinas (North and South Carolina), launching new operations in the Gulf
      Coast, launching new brokerage operations in the Carolinas and expanding its
      membership program which has attracted a substantial number of new builder
      relationships.


-
          25
          -





Future
      income/losses will depend on the success of implementing the company’s business
      plan in 2007. The company does already have approximately $24,800,000 of new
      home, remodeling and development contracts for 2007 which is a $19,700,000
      increase from last year at this time and $18,800,000 increase from the end
      of
      year. The Company also has a new realty brokerage operation which will generate
      fee income for helping customers sell their existing home and buy vacant land
      to
      build a new home, and has signed homebuilder agreements with experienced
      homebuilders which is expected to increase custom homes sales in the Carolinas
      and Gulf Coast regions and consistent with implementing our business
      plan.





**RESULTS
      OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
      2007**





**SALES
      AND COST OF SALES**





**Sales**





The
        Company had Sales (new home and renovation design/build sales) of $1,410,513
        for
        the nine months ending September 30, 2007, compared to $793,443 for the same
        period in 2006. The s ales
        recorded is principally due to the completion of two new home and two renovation
        projects and service fees generated from new projects signed during the period
        compared to the same period in 2006. As of the filing of this report, the
        Company has new contracts (21 new home, 6 renovation and 31 development)
        totaling approximately $24,800,000 in sales that are projected to be completed
        over the next 12-24 months, which reflects a $19,700,000 increase from the
        number reported in our Quarterly Report on 10-QSB for the period ending
        September 30, 2006 and reflects $18,800,000 increase from the Annual Report
        on
        10-KSB for the period ending December 31, 2006. Included in these figures
        is a
        development contract the company signed in late July to build and sell
        approximately 31 new homes totaling approximately $16.3 million in revenue
        over
        the next 12-24 months (see Part II, Item 5 for details). All sales were from
        unrelated third parties and were made primarily to new home buyers and
        remodeling work.





Included
      in the sales are service fee revenues from pre-sold projects including
      architectural design fees, engineering fees, and a series of project
      coordinating expenses charged to each design/build project. These fees are
      built
      into the projects total price with Homebuyers paying these charges at the
      beginning of construction. The fees are a direct cost to the project. Going
      forward we would expect sales and service fee revenue to continue to grow
      commensurate with increases in new contract sales.





On
      average new home construction projects are completed within 9 months and
      remodeling projects are completed within 3 months. The Company reports sales
      based on the contract amount due for design and build projects in the quarter
      in
      which the sale is completed, closed and approved.





**Cost
      of Sales**





The
      cost
      of design/build sales represents all direct costs in building a new home or
      remodeling project, including sticks and bricks, labor and builder costs and
      management fees charged to the project (as described under sales and service
      fees above).





**Gross
      Profit**





HouseRaising’s
      gross profit represents the difference between Sales (including service fee
      revenue) and cost of sales. The Company earns profits as the net difference
      of
      project’s sales price and total costs including fees. Costs associated with
      in-house builder relationships are part of the projects total costs and
      HouseRaising’s profit is the difference in the sales price and all direct costs
      and fees. In a contract builder relationship the company shares profits with
      the
      builder, which is accounted for as a cost to the project.





HouseRaising’s
      gross profit was $129,230 for the nine months ending September 30, 2007 compared
      to 80,016 for the same period in 2006 which reflects the completion of new
      home
      construction and remodeling projects and service fees generated from new
      projects signed during the period compared to the same period in 2006. The
      profit margin for the projects was approximately 10%. Management would expect
      the Company’s gross profits to grow as we obtain and complete new construction
      and remodeling work in the Carolinas and Gulf Coast in 2007 and continue the
      roll-out of the Company’s membership and real estate brokerage
      operation.


-
          26
          -





**OTHER
      REVENUES**





The
          Company earned $ 231,335
          in other income for the nine-month period ending September 30, 2007, principally
          as a result of successfully lauching HouseRaisingRealty, LLC to assist
          homebuyers in selling their existing homes or acquiring lots for their
          new
          custom homes and thus generating real estate commissions. The company closed
          real estate sales transactions of over $8,697,000 generating $224,630 in
          new
          revenues for the nine-month period versus none in the same period last
          year. As
          of the filing of this report and after quarter end, HouseRaisingRealty
          has
          closed additional sales transactions totaling over $1,550,000 which will
          generate approximately $41,000 in commission income to be reported in the
          next
          quarter, pending sales transactions totaling $2,600,000 which will generate
          approximately $92,000 in commission income to the Company, along with active
          listings for sale of $3,400,000. Management expects these sales levels to continue to increase as the company
          builds its brokerage operation.





The
      Company also receives marketing fees of approximately $12,000 a year from its
      contractual relationship with SunTrust Mortgage and recorded $5,000 in such
      fees
      year to date. The Company recorded $1,500 in membership
      fees year to date and expects membership fees to increase as the company
      promotes its membership services to independent custom home builders.





A
      breakdown of Company revenue streams for the nine-month period ending September
      30, 2007 is provided below:





**HOUSERAISING
                REVENUE STREAM:**
            
            For Nine Months
                Ending
              September 30, 2007
            
            For Nine Months
                Ending
              September 30, 2006**Revenues
                from Custom Homebuilding Operations:**
            
            $
            1,410,513
            
            $
            793,443**Revenues
                from Realty Services:**
            
            
            224,630
            
            
            0**Revenues
                from Disaster Relief Services:**
            
            
            0
            
            
            0**Revenues
                from Builder-Memberships:**
            
            
            1,500
            
            
            0**Other
                Revenues (including co-branding agreements):**
            
            
            5,205
            
            
            5,528**TOTAL
                REVENUES**
            
            $
            1,641,848
            
            $
            798,971**Number
                of New Custom Homes Completed:**
            
            
            2
            
            
            1**Number
                of Remodeling Projects Completed:**
            
            
            2
            
            
            4





**EXPENSES**





Total
      expenses for the nine-months ended
      September 30, 2007 was $4,961,378 compared to $2,864,576 for the same period
      in
      2006. The increase in expenses was due principally to the company implementing
      its business plan and incurring $746,892 in depreciation for its Capitalized
      Software (which reflects full-implementation of its System-C management system)
      and one-time expense of approximately $350,000 for securing financing and
      long-term management agreements in the first quarter and an accrual of $108,000
      in both the second and third quarter. The Company has expanded operations in
      the
      Carolinas (North and South Carolina), launched new operations in the Gulf Coast,
      launched new brokerage operations in the Carolinas and expanded its membership
      program which has attracted a substantial number of new builder partnerships.





Selling,
      general and administrative expenses were higher for the nine months ending
      September 30, 2007 versus 2006, increasing from $1,445,640 in 2006 to $2,543,811
      in 2007. These expenses reflect costs related to developing HouseRaising’s
      Carolinas and Gulf Coast zone operations, the Company’s realty brokerage
      operation, the Company membership program and disaster relief operations,
      including advertising, costs for personnel and contractors who are directly
      associated with and who devote time to selling, designing and building pre-sold
      homes and renovation projects in the Carolinas and Gulf Coast regions,
      commission sales personnel for its realty brokerage operation in the Carolinas
      and builder-memberships nationally and disaster relief services in the Gulf
      Coast region. These expenses also include general business and executive
      management services to raise capital for implementation of its business plan
      and
      previously committed payments for services provided to the company.





The
      company also paid a portion of its consulting, professional and salaries in
      stock-based compensation which increased slightly from $1,252,271 in the first
      nine-months of 2006 to $1,290,780 for the same period in 2007. This includes
      a
      one-time payment of Convertible Preferred Stock Class C valued at approximately
      $286,000 as compensation to two executive personnel in exchange for signing
      a
      long-term management agreement as reported on January 11, 2007 on SEC Form
      8-K
      and $308,888 as 8/36 th amortization of compensation to a principal executive in exchange for a
      three-year personal guarantee with Wachovia that extended an additional $4
      million line of credit to the Company on February 9, 2007 as reported on SEC
      Form 8-K (as further described under Other Events in this filing). The Company
      does not expect to issue any additional convertible preferred stock in the
      foreseeable future. Without the one time payment and accrual, stock based
      compensation in 2007 would be lower for the period and comparable to stock-based
      compensation in 2006. In addition, these expenses also include consulting fees
      for business consulting services and investor relations
      expenses.


-
          27
          -


The
      Company had depreciation expense in the amount of $746,892 in the first
      nine-months of 2007 compared to 25,285 in 2006. The large increase from prior
      year reflects the company commencing depreciation on its Capitalized Software
      (System-C) at a rate of approximately $229,000 per quarter and an increase
      in
      the company’s investment in property and equipment, particularly its design
      center in Charlotte and the Gulf Coast. The Company expects to depreciate the
      company’s System-C over a 15-year period.





The
      Company had interest expense of $379,895 for the nine-month period ending
      September 30, 2007 compared to $141,380 for the same period in 2006. The
      increase includes a one-time payment of $60,000 for a back-up standby letter
      of
      credit for the financing with Wachovia (as further described under Other Events
      in this filing) and interest related to equity for debt swap with our final
      bridge lender. In 2003, HouseRaising completed a debt offering to a select
      group
      of accredited investors, which provided cash of $507,727 to HouseRaising, Inc.
      In November, 2004, the Company completed an equity-for-debt swap which
      reimbursed these investors for their debts and converted much of the outstanding
      debt to restricted shares in the company. In the first quarter of 2007, the
      company completed equity for debt swap with its final bridge lender in the
      amount of $155,000 plus accrued interest of $57,401. The interest recorded
      in
      2007 was principally for the company’s line of credit with Wachovia Bank, the
      standby letter of credit and additional accrued interest associated with the
      equity for debt swap. The interest recorded in 2006 was principally to reimburse
      bridge lenders to HouseRaising. Going forward the level of interest expense will
      be based principally on the Wachovia line of credit drawn.





**INCOME
      / LOSSES**





The
      net
      loss for the nine-month
      period ended September 30, 2007 was $4,600,813 versus a net loss of $2,779,032
      in the same period in 2006. The increase in net losses is directly attributable
      to commencing depreciation for its Capitalized Software (System-C) in the amount
      of $746,892, one-time expenditures totaling about $594,000 to secure a line
      of
      credit for financing and long-term management agreements and additional expenses
      to fully implement its business plan: expanding operations in the Carolinas
      (North and South Carolina), launching new operations in the Gulf Coast,
      launching new brokerage operations in the Carolinas and expanding its membership
      program which has attracted a substantial number of new builder relationships.





Future
      income/losses will depend on the success of implementing the company’s business
      plan in 2007. The company does already have approximately $24,800,000 of new
      home, remodeling and development contracts for 2007 which is a $19,700,000
      increase from last year at this time and $18,800,000 increase from the end
      of
      year. The Company also has a new realty brokerage operation which will generate
      fee income for helping customers sell their existing home and buy vacant land
      to
      build a new home, and has signed homebuilder agreements with experienced
      homebuilders which is expected to increase custom homes sales in the Carolinas
      and Gulf Coast regions and consistent with implementing our business
      plan.





**Impact
      of Inflation**





We
      believe that inflation has had a negligible effect on operations since
      inception. We believe that we can offset inflationary increases in the cost
      of
      labor by increasing sales and improving operating efficiencies.





**Liquidity
      and Capital Resources**





Cash
      flow s
      used in
      operations were $2,016,718 for the nine months ended September 30, 2007 versus
      $1,049,794 for the same period in 2006. This reflects a net increase in cash
      used by operations of $966,924 principally due to the increase in net loss
      for
      the period and decrease in value of stock issued for services for the nine
      months, offset by the increase in depreciation for the period.





Cash
      flows used in investment activities were $711,838 and $1,022,407 for the
      nine-months ended September 30, 2007 and 2006, respectively. This reflects
      a net
      decrease in cash used by investment activities principally due to less
      investment in capitalized software and an increase in investments in property
      and equipment for the company, including the company’s design center in
      Charlotte and New Orleans.





Cash
      flows provided by financing activities were $2,869,140 and $1,982,090,
      respectively, for the nine-months ended September 30, 2007 and 2006. The
      increase is principally due to an increase in borrowings on the line of credit
      with Wachovia Bank which was reduced by a decrease in common stock subscribed
      but not issued as a result of the issuance or other settlement of such
      obligations and payment of its secured demand note payable to a related party.
      The company no longer has any debt obligations to outside bridge lenders and
      has
      paid off its secured
      demand note payable to a related party.




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          28
          -




We
      had
      cash on hand of $308,286 and a
      working capital deficit of $5,956,818 as of September 30, 2007, although most
      of
      this deficit is from the bank loan with Wachovia which on February 9, 2007
      extended an additional line of credit in the amount of $4 million to the Company
      (as further described under Other Events in this filing).


Going
        forward we will
        rely substantially on revenue from existing contracts, new business development
        efforts, and the $8.1 million line of credit from Wachovia bank to sustain
        our
        business for the next twelve months. The company has approximately $24,800,000
        of new home, remodeling and development contracts for 2007, a new real estate
        brokerage operation that has already generated new income (and is cash flow
        positive as of the end of the first quarter of 2007) with pending sales
        transaction of $2,600,000 and listings of $3,400,000 (on which the company
        would
        earn a sales commission) and will be establishing a new office in Brunswick,
        North Carolina, a new design/build zone operation in the Gulf Coast with
        a new
        10,000 square foot design center open for business in New Orleans in an area
        that needs to rebuild approximately 40,000 homes, and a pipeline of prospective
        new design/build customers in the Carolinas and Gulf Coast which is consistent
        with implementing our business plan. The company has completed its capitalized
        software and fully implemented which we would expect to be used for generating
        new design/build sales in the Carolinas and the Gulf Coast. The Company has
        signed homebuilder agreements with experienced homebuilders which are expected
        to increase custom homes sales in the Carolinas and Gulf Coast regions and
        consistent with implementing our business plan. Actual sales will be recorded
        upon completion of each project while sales and service revenue will be recorded
        as earned. To date, the company has had investors willing to contribute equity
        to finance on-going operations. However, such parties are under no legal
        obligation to provide us with future capital infusions.





The
      Company expects to use funds from homebuilding and realty brokerage operations
      and bank funding primarily to expand sales and marketing efforts of its
      homebuilding operations (new home, renovation and development sales) in the
      Carolinas (covering North and South Carolina) and the Gulf Coast region,
      implementing marketing and sales for its membership and independent builder
      programs in the southeast and eventually nationally and implementing marketing
      and sales for its realty brokerage operations. The Company may also consider
      selective acquisition opportunities that may assist in the successful
      implementation of its business plan (see Part II Item 5 Other Matters for
      further discussion on this item).





Overall,
      we have funded our cash needs from inception through September 30, 2007 with
      a
      series of debt and equity transactions. The Company’s principal source of
      working capital in 2007 was a line of credit established with Wachovia Bank,
      the
      sales of the company’s Private Placement Memorandum to accredited investors,
      commitments from vendors to develop HouseRaising’s software system in exchange
      for shares of stock, and fee revenues and profits from existing new home and
      renovation sales. In addition, some Management and independent contractors
      providing services to the company have agreed to accept shares as a means of
      paying for critical services to implement its business plan. We have not entered
      into any commitments for significant capital expenditures, except the on-going
      software development project previously mentioned.





Demand
      for our services will be dependent on, among other things, market acceptance
      of
      our services, the real estate market in general, and general economic
      conditions, which are cyclical in nature, particularly in the markets we serve.
      Inasmuch as a major portion of our activities is the receipt of revenues from
      the sales of new home services, our business operations may be adversely
      affected by our competitors and prolonged recessionary periods. The Company
      does
      believe that its principle operations are in attractive markets, the Carolinas
      and Gulf Coast region, and that the custom homebuilding sector is less impacted
      by overall economic conditions, but there is no guarantee this will remain
      so
      going forward. The company has provided a detailed list of risks and cautionary
      statements at the beginning of this document.





**ITEM
      3. CONTROLS AND PROCEDURES**





*Quarterly
      Evaluation of Controls* .
      As of
      the end of the period covered by this quarterly report on Form 10-QSB, we
      evaluated the effectiveness of the design and operation of our disclosure
      controls and procedures ("Disclosure Controls"). This evaluation (“Evaluation”)
      was performed by our Chairman, Chief Executive Officer and President, Gregory
      J.
      Wessling (“CEO”), our Chief Financial Officer, Richard A. von Gnechten (“CFO”)
      and our Chief Administrative Officer, Christine M. Carriker. In addition, we
      have discussed these matters with our securities counsel. In this section,
      we
      present the conclusions of our CEO and CFO based on and as of the date of the
      Evaluation with respect to the effectiveness of our Disclosure
      Controls.





*CEO
      and CFO Certifications* .
      Attached to this annual report, as Exhibits 31.1 through 31.2, are certain
      certifications of the CEO and CFO, which are required in accordance with the
      Exchange Act and the Commission's rules implementing such section (the "Rule
      13a-15(e)/15d-15(e) Certifications"). This section of the annual report contains
      the information concerning the Evaluation referred to in the Rule
      13a-15(e)/15d-15(e) Certifications. This information should be read in
      conjunction with the Rule 13a-15(e)/15d-15(e) Certifications for a more complete
      understanding of the topic presented.


-
          29
          -





*Disclosure
      Controls* .
      Disclosure Controls and procedures are those controls and procedures designed
      with the objective of ensuring that information required to be disclosed in
      our
      reports filed with the Commission under the Exchange Act, such as this quarterly
      report, is recorded, processed, summarized and reported within the time period
      specified in the Commission's rules and forms. In addition, Disclosure controls
      and procedures include controls and procedures designed to ensure that
      information required to be disclosed by us in the reports that we file or submit
      under the Exchange Act is accumulated and communicated to our management,
      including our principal executive officer, principal financial officer, and
      chief administrative officer, or persons performing similar functions, as
      appropriate to allow timely decisions regarding required disclosure.





*Limitations
      on the Effectiveness of Controls* .
      Our
      management does not expect that our Disclosure Controls will prevent all error
      and all fraud. A control system, no matter how well developed and operated,
      can
      provide only reasonable, but not absolute assurance that the objectives of
      the
      control system are met. Further, the design of the control system must reflect
      the fact that there are resource constraints, and the benefits of controls
      must
      be considered relative to their design and monitoring costs. Because of the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of a system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.





*Scope
      of the Evaluation* .
      The CEO
      and CFO's evaluation of our Disclosure Controls included a review of the
      controls' (i) objectives, (ii) design, (iii) implementation, and (iv) the effect
      of the controls on the information generated for use in this quarterly report.
      In the course of the Evaluation, the CEO and CFO sought to identify data errors,
      control problems, acts of fraud, and they sought to confirm that appropriate
      corrective action, including process improvements, was being undertaken. This
      type of evaluation is done on a quarterly basis so that the conclusions
      concerning the effectiveness of our controls can be reported in our quarterly
      reports on Form 10-QSB and annual reports on Form 10-KSB. The overall goals
      of
      these various evaluation activities are to monitor our Disclosure Controls,
      and
      to make modifications if and as necessary. Our intent in this regard is that
      the
      Disclosure Controls will be maintained as dynamic systems that change (including
      improvements and corrections) as conditions warrant.





*Conclusions.* Based
      upon the Evaluation, our disclosure controls and procedures are designed to
      provide reasonable assurance of achieving our objectives. Our CEO and CFO have
      concluded that our disclosure controls and procedures are effective at that
      reasonable assurance level to ensure that material information relating to
      the
      Company is made known to management, including the CEO and CFO, particularly
      during the period when our periodic reports are being prepared, and that our
      Internal Controls are effective at that assurance level to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      affect, our Internal Controls.





**PART
      II**





**ITEM
      1. LEGAL PROCEEDINGS.**





**In
      the matter of Nite Capital, LP, Plaintiff v. Robert V. McLemore and
      HouseRaising, Inc., Defendants, 05C 3757:**





On
      May 3,
      2006, Nite Capital, LP (“Nite”) re-filed its complaint against Robert V.
      McLemore, the late President of HouseRaising (“McLemore”) and HouseRaising, in
      the Circuit Court of the Nineteenth Judicial Circuit for Lake County, Illinois.
      The re-filed complaint essentially makes the same allegations and demands the
      same relief as an earlier complaint filed in federal court in Illinois.
      HouseRaising filed a motion for dismissal based on lack of jurisdiction, but
      this filing was denied on October 18, 2006. Consistent with time requirements
      of
      Illinois law, HouseRaising filed a response to the complaint in Circuit Court
      on
      November 7, 2006. A copy of a Form 8-K, filed with the Commission on July 19,
      2005, reporting the filing of the initial complaint by Nite in the U.S. District
      Court for the Northern District of Illinois, Eastern Division, against McLemore
      and HouseRaising, describes the litigation in more detail and is hereby
      incorporated by reference. That complaint was voluntarily dismissed on a motion
      made by Nite on April 12, 2006. The case currently pending in the Nineteenth
      Judicial Circuit for Lake County, Illinois is in the discovery phase.





Until
      his
      death, Mr. McLemore maintained his previously stated position that Nite Capital
      defaulted on the underlying contract and that he and HouseRaising are not at
      fault. As previously stated, the terms of the contract at issue were disputed
      by
      the Defendants, and HouseRaising reports that it was not even a party to the
      alleged contract. The Defendants have engaged Sugar, Friedberg and Felsenthal,
      LLP, counsel admitted to practice law in state court in Illinois and the U.S.
      District Court for the Northern District of Illinois, and intend to vigorously
      defend this action. The Company believes the claims against it amount to a
      thinly disguised effort to insert HouseRaising into a dispute over a contract
      between two private parties. It is unclear what will happen as a result of
      the
      recent death of Mr. McLemore, other than that Mr. McLemore’s representative has
      been substituted as a defendant for him. In light of these matters, the parties
      are in settlement discussions, although there can be no assurance that it will
      be settled.


-
          30
          -





**Background:**


In
      November 2004, Robert V. McLemore, the late President and Founder of
      HouseRaising, entered into a personal contract whereby he agreed to sell Nite
      Capital, LP, an investment firm based in Chicago, Illinois, a certain number
      of
      shares of his personal stock in return for Nite Capital’s agreement not to sell
      the shares for a set period of time and not to short sell the shares. It was
      Mr.
      McLemore’s belief that Nite Capital defaulted on this contract, and, as a
      result, McLemore refused to complete the transaction until a review of the
      short
      selling activities of Nite Capital and its principals could be completed. In
      connection with such review, HouseRaising filed a complaint with the NASD which
      requested an investigation into what management termed a “wave of coordinated
      naked short selling” in HouseRaising’s common stock over a three month period of
      time. Management of HouseRaising believes that this coordinated effort may
      have
      violated NASD rules, as well as applicable federal securities laws. These
      matters have yet to be determined by a court of law.





**ITEM
      2. CHANGES IN SECURITIES.**





On
      October 30, 2007, The Company signed an agreement with Linda
      W.
      McLemore, wife of the late President and Founder of the Company, Christine
      McLemore Carriker, daughter of the late President and Founder and Senior Vice
      President and Director of the Company, Elizabeth McLemore, daughter of the
      late
      President and Founder and Director of the Company, the estate of Robert V.
      McLemore, AFF, Inc., a North Carolina corporation, and the Robert V. McLemore
      Family Revocable Trust, pursuant to which Linda W. McLemore, AFF, Inc., the
      estate of Robert V. McLemore and the Robert V. McLemore Family Revocable Trust
      agreed to sell, and the Company agreed to buy, a total of 25,777,286 shares
      of
      restricted common stock of the Company at a purchase price of $.01 per share
      in
      a private transaction subject to the approval of the Mecklenburg County Clerk
      of
      Courts.





It
      is the
      intention of the Company, if the transaction is approved, to cancel and retire
      the shares, which represent 45.8% of the 56,251,897 issued and outstanding
      shares of common stock as of September 30, 2007. If the stock purchase is
      approved by the Clerk of Court, it is hoped that the reduced number of shares
      outstanding will make the Company more attractive to investors and will enable
      the Company to operate more independently. A copy of the Agreement was attached
      as Exhibit 10.1 to Form 8-K filed on November 7, 2007 and is incorporated by
      reference herein.





On
      April
      11, 2007, the Company announced that the company’s board of directors authorized
      management to purchase up to $100,000 of the company’s shares of common stock
      over the next six months. The Company will work with Wachovia Securities, Inc.,
      the broker-dealer subsidiary of Wachovia Bank, on all repurchases which will
      be
      made strictly pursuant to the requirements of Rule 10b-18. The source of funding
      for the purchases will come from cash flow. For the period ending September
      30,
      2007, the company had made the following repurchases:





Date of
              Transaction
            
            Shares
              Purchased
            
            Price of
              Shares
            
            Price including
              Commission
            
            Net
              Amount7/9/2007
            
            
            10,000
            
            
            0.1675
            
            
            0.1778
            
            $
            1,777.507/16/2007
            
            
            3,650
            
            
            0.1700
            
            
            0.1819
            
            $
            664.007/17/2007
            
            
            2,000
            
            
            0.1700
            
            
            0.2213
            
            $
            442.507/19/2007
            
            
            10,000
            
            
            0.1700
            
            
            0.1744
            
            $
            1,743.507/20/2007
            
            
            6,000
            
            
            0.1700
            
            
            0.1871
            
            $
            1,122.507/26/2007
            
            
            5,000
            
            
            0.1550
            
            
            0.1637
            
            $
            818.507/30/2007
            
            
            1,000
            
            
            0.1350
            
            
            0.1560
            
            $
            156.007/31/2007
            
            
            230
            
            
            0.1500
            
            
            0.1976
            
            $
            45.458/2/2007
            
            
            5,000
            
            
            0.1500
            
            
            0.1705
            
            $
            852.508/8/2007
            
            
            7,000
            
            
            0.1600
            
            
            0.1662
            
            $
            1,163.508/10/2007
            
            
            2,000
            
            
            0.1600
            
            
            0.1600
            
            $
            320.008/14/2007
            
            
            4,000
            
            
            0.1600
            
            
            0.1709
            
            $
            683.500
            
            
            0.0000
            
            
            0.0000
            
            $
            0.00Totals:
            
            
            55,880
            
            
            
            
            
            
            
            $
            9,789.45




-
          31
          -





In
      light
      of the agreement signed on October 30, the Company will discontinue the
      corporate buy-back program.




**ITEM
      3. DEFAULT UPON SENIOR SECURITIES.**





None.




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





None.





**ITEM
      5. OTHER MATTERS**





Part
      of
      HouseRaising, Inc.’s strategy is to build its business through the merger or
      acquisition of existing homebuilders and technology companies that will benefit
      our application service business. It is reasonable to expect that such activity
      is an ongoing part of HRI’s business development efforts. At any given time the
      company could be in process of analyzing or negotiating
      an offer in connection with such a transaction. However, any discussion or
      speculation on specific transactions is only conjecture until such time that
      a
      definite agreement is signed and announced in an SEC filing and press release.
      It is possible that no transactions will take place at all.





**Development
      Agreement**





On
      July
      18, 2007, HouseRaising entered into a letter of agreement (“development
      agreement”) with a developer for purposes of developing property and building
      approximately 31 single family homes on a property located in Catawba County,
      North Carolina. The developer will bring forward the property and secure a
      loan
      to pay for development improvements, including curb and gutter and a front
      entrance, as per a contract with a land grading and development company. It
      is
      expected that the average price of a lot in this development will be between
      $95,400 and $106,000 (with some lots costing more and some less) and the average
      price of a new home built by HouseRaising between $400,000 and $600,000 (with
      some homes costing more and some less). The developer will enter into an
      exclusive right to sell listing agreement with HouseRaisingRealty, a Company
      subsidiary. HouseRaisingRealty will receive a sales commission for the sales
      of
      the lots. The Company will earn a management fee for services provided and
      a
      profit on the construction of new homes in the development when they are
      completed. It is expected that this development will have a 12-24 month sales
      time period and will generate approximately $16.3 million in gross sales when
      it
      is completed.





**Affiliation
      Agreements**





On
      June
      28, 2006, the Company and SunTrust Mortgage (“SunTrust Mortgage”) entered into a
      Strategic Agreement pursuant to which SunTrust will be the mortgage lender
      of
      choice to the Company for the making and/or refinancing of construction loans
      in
      connection with the building of custom homes for the Company’s customers and for
      the making of permanent residential mortgage loans in connection with the
      financing of those homes. In addition, the Company will provide selected
      marketing services to Sun Trust Mortgage related to the co-marketing arrangement
      In return, SunTrust has agreed to develop a fixed rate product for qualifying
      customers of the Company and has granted the Company a non-exclusive license
      to
      use the SunTrust name and logo in the Company’s advertising for the purpose of
      indicating the availability of loan financing by SunTrust to qualified
      applicants. In addition, SunTrust has agreed to identify and/or create a group
      of SunTrust employees who will be tasked with assisting the Company’s sales
      staff in providing Company’s customers with all aspects of the mortgage loan
      process.





Under
      the
      Strategic Agreement, the Company is responsible for, among other things, paying
      for marketing, services and goods related to the Strategic Agreement and
      SunTrust, in return, will compensate Company with a nominal amount equivalent
      to
      the fair market value of such marketing, services and goods.





The
      Strategic Agreement commences on the effective date and will continue thereafter
      in six (6) month increments, subject to termination by either party, with or
      without cause, upon delivery of thirty (30) days written notice to the other
      party.





Each
      party to the Strategic Agreement has agreed to indemnify and hold harmless
      the
      other party, it’s affiliates and their respective directors, officers,
      employees, agents and subcontractors from and against, among other things,
      any
      action or threatened action, suit or proceeding arising out of or as a result
      of, the indemnifying party’s performance under the Agreement and against any and
      all claims, expenses, losses or damages (including reasonable attorneys’ fees)
      that result from the actions or inaction of the indemnifying party.


-
          32
          -


SunTrust
      Mortgage does not provide mortgage financing in Louisiana or Mississippi, so
      the
      Company had made arrangements with the Gulf Coast Bank and Trust Company to
      provide construction and permanent financing for customers in those
      jurisdictions.





**Other
      Events**





On
      February 9, 2007, HouseRaising and Wachovia Bank, N.A. (“Wachovia”), entered
      into a loan agreement (the “Agreement”) pursuant to which Wachovia agreed to
      make a new operating line of credit in the amount of $4 million available to
      the
      Registrant. The new operating line of credit will be secured by a standby letter
      of credit procured by a pledge of securities having a value of not less than
      $5.4 million by Gregory J. Wessling, Chairman, Chief Executive Officer and
      President of the Registrant. This operating line of credit is part of the $8.1
      million in lines of credit discussed above in Note K to the Notes to the
      Financial Statements.





As
      an
      inducement for Mr. Wessling to agree to enter into the standby letter of credit,
      the Company agreed to issue Mr. Wessling 500,000 shares of the Compoany’s Series
      C Convertible Preferred Stock, which have a ten to one conversion rate into
      whole shares of restricted common stock three years after issuance. The Company
      is accruing the value of this consideration over a 36 month period of time
      (the
      expected period of the standby letter of credit and pledge of securities)
      beginning February, 2007 and recorded the unamortized amount as a prepaid
      expense on the balance sheet. As a further inducement for Mr. Wessling to enter
      into the standby letter of credit, eight shareholders (including Wessling),
      who
      are affiliates of the Company holding 52,472,835 of the Company’s total combined
      voting power of 70,769,282 shares, or 74.1% of the Company’s total combined
      voting power, entered into a shareholders’ agreement, dated February 9, 2007
      (the “Shareholders’ Agreement”). The Shareholders’ Agreement provides that the
      shareholders will not, for a period of three years, vote their shares in favor
      of any issue that could have an “adverse effect” (as defined) on any other party
      to the agreement without the prior written consent of the other party. In
      addition, the shareholders agreed, for a period of three years, to grant each
      other and the Company certain rights of first refusal in connection with any
      proposed sale of their shares to a third party. Finally, the shareholders agreed
      for a period of three years to give each other shareholder the right to sell
      their shares on a pro rata basis in the event that any shareholder proposes
      to
      enter into certain private sale transactions. Lastly, the Robert V. McLemore
      Family, the Robert V. McLemore Family Trust and the Estate of Robert V. McLemore
      have agreed, for a period of three years, to continue a pledge arrangement
      with
      Wachovia with respect to 6,704,040 shares which have been pledged to Wachovia
      as
      collateral security for certain of the operating lines of credit.





The
      Shareholders’ Agreement is intended to provide, among other things, stability to
      the Company’s management during the period that Mr. Wessling is a party to the
      standby letter of credit and has exposed his assets to considerable financial
      risk in order to procure the new operating line of credit for the Company with
      Wachovia. Nonetheless, certain provisions of the Shareholders’ Agreement could
      have an anti-takeover effect and could impede a change in control of the Company
      as a result of the voting agreement and the buy-sell provisions contained
      therein. All of the shares that are subject to the Shareholders’ Agreement are
      owned by affiliates.


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**ITEM
      6. EXHIBITS AND REPORTS ON FORM 8-K**





**(a)
      Reports on Form 8-K**





Subsequent
      to September 30, 2007, the Company filed the following Current Reports on Forms
      8-K with the SEC as follows:





Dated (filing date)
              Items ReportedNovember 7, 2007 (October 30,
                2007)
              Form
                8-K Material Agreement





**(b)
      Exhibits**





Exhibits
      for HouseRaising and its subsidiaries are listed below.





**INDEX
      TO EXHIBITS**





The
      exhibits designated by an asterisk (*) are filed herein. The exhibits not so
      designated are incorporated by reference to the indicated filing.





Exhibit
                No.
            Descriptions2.1.1
            Agreement
                and Plan of Merger, dated February 19, 2004 (incorporated by reference
                from Exh. 2 to the Definitive Information Statement filed on August
                10,
                2004)3.1
            Articles
                of Incorporation (incorporated by reference from Exh.3 of Form SB-2
                filed
                April 11, 2002)3.2
            Articles
                of Amendment to Articles of Incorporation to Change Name (incorporated
                by
                reference from Exh. 3 to the Definitive Information Statement filed
                August
                10, 2004)3.3
            Bylaws
                of HouseRaising, Inc. (incorporated by reference from Exh.3 to Form
                SB-2
                filed April 11, 2002)3.4
            Articles
                of Amendment for Class A Voting Convertible Preferred Stock (incorporated
                by reference from Exh. 4 to the Definitive Information Statement
                filed
                August 10, 2002)3.5
            Articles
                of Amendment for Class B Voting Convertible Preferred Stock (incorporated
                by reference to Exh. 10 to Form 8-K filed on August 16,
                2006)3.6
            Articles
                of Amendment for Class C Voting Convertible Preferred Stock (incorporated
                by reference to Exh. 10 to Form 8-K filed on January 22,
                2007)31.1
            Rule
                13a-15(e)/15d-15(e) Certification of Gregory J. Wessling, Chairman
                and
                Chief Executive Officer*31.2
            Rule
                13a-15(e)/15d-15(e) Certification of Richard A. von Gnechten, Chief
                Financial Officer*31.3
            Rule
                13a-15(e)/15d-15(e) Certification of Christine M. Carriker,
                Secretary/Treasurer, SVP & Chief Administrative
                Officer*32.1
            Section
                1350 Certification of Gregory J. Wessling, Chairman and Chief Executive
                Officer*32.2
            Section
                1350 Certification of Richard A. von Gnechten, Chief Financial
                Officer*32.3
            Section
                1350 Certification of Christine M. Carriker, Secretary/Treasurer,
                SVP and
                Chief Administrative Officer*


_________________________________


*-Filed
      herewith





-signature
      page follows-


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SIGNATURES





Pursuant
      to the requirements of Section 13 or 15 (d) of the Securities Exchange Act
      of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





HOUSERAISING,
                INC.(Registrant)Date:
              November 14, 2007
            /s/
            Gregory
                J. WesslingGregory
                J. WesslingChairman
                of the Board andChief
                Executive Officer(Principal
                Executive Officer)Date:
              November 14, 2007
            /s/
            Richard
                A. von GnechtenRichard
                A. von GnechtenChief
                Financial Officer(Principal
                Financial Officer)Date:
              November 14, 2007
            /s/
            Christine
                M. CarrikerChristine
                M. CarrikerSecretary/Treasurer,
                SVP &Chief
                Administrative Officer(Principal
                Accounting Officer)


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