UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549





FORM
      10-QSB




(Mark
      One)





**x**
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
                OF
                1934





For
      the
      quarterly period ended September 30, 2007





OR





**o**
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period from ___________ to ___________.





Commission
      File Number 333-140204


INTELLIHOME,
        INC.


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




Texas
            
            76-0672176(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS EmployerIdentification
                No.)




5150
      Franz Road, Suite 100, Katy, Texas 77493


(Address
      of principal executive offices)(Zip Code)





(281)
      391-4199


(Registrant's
      telephone number, including area code)







(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days.
      Yes  x  No  o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes  o  No  x





As
      of
      November 9, 2007, we had 24,685,000 shares of $0.001 par value Common Stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one) Yes  o  No  x









INTELLIHOME,
      INC.





FORM
      10-QSB





INDEX


Page
                  No.PART
                  I.FINANCIAL
                  INFORMATIONItem
                  1. Financial Statements (Unaudited)Balance
                  Sheet as of September 30, 2007
              
              3Statements
                  of Operations for the three months and nine months
                  ended
                September
                  30, 2007 and September 30, 2006
              
              4Statements
                  of Cash Flows for the nine months ended
                  September 30, 2007
                and
                  September 30, 2006
              
              5Notes
                  to Financial Statements
              
              6Item
                  2. Management's Discussion and Analysis of Financial
                  Condition and
                Results
                  of Operations
              
              8Item
                  3. Controls and Procedures
              
              13PART
                  IIOTHER
                  INFORMATIONItem
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              
              14Item
                  6. Exhibits
              
              14
  2





PART
      I -
      FINANCIAL INFORMATION




ITEM
      1.  Financial
      Statements




INTELLIHOME,
          INC.
 BALANCE
        SHEET


September
      30, 2007


(Unaudited)





ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            22,801Accounts
                receivable, net of allowance for doubtful accounts of
                $1,007
            
            
            56,581Inventories
            
            
            14,695Prepaid
                expenses
            
            
            2,403Total
                current assets
            
            
            96,480PROPERTY
                AND EQUIPMENT
            
            
            5,718OTHER
                ASSETS, Purchased accounts, net
            
            
            900Total
                assets
            
            $
            103,098LIABILITIES
                AND SHAREHOLDERS’ DEFICITCURRENT
                LIABILITIESAccounts
                payable
            
            $
            58,702Credit
                cards payable
            
            
            95,136Payroll
                and other accrued liabilities
            
            
            78,478Sales
                tax payable
            
            
            5,945Notes
                payable in default
            
            
            20,159Note
                payable - related parties
            
            
            25,000Advance
                from shareholder
            
            
            10,000Unearned
                revenue on contracts
            
            
            8,008Total
                current liabilities
            
            
            301,428NON-CURRENT
                LIABILITIESUnearned
                revenue on contracts
            
            
            909Total
                liabilities
            
            
            302,337COMMITMENTS
                AND CONTINGENCIESSHAREHOLDERS’
                DEFICITPreferred
                stock, $0.001 par value; 20,000,000 shares authorized:Series
                A convertible preferred stock, 6,000,000 shares authorized,
                issuedand
                outstanding, $300,000 liquidation value, no redemption
                value
            
            
            6,000Series
                B convertible preferred stock, 2,700,000 shares authorized,
                issuedand
                outstanding, $270,000 liquidation value, no redemption
                value
            
            
            2,700Common
                stock, $0.001 par value; 100,000,000 shares authorized;21,300,000
                shares issued and outstanding
            
            
            21,300Additional
                paid-in capital
            
            
            541,854Retained
                deficit
            
            
            (
                771,093
            )Total
                shareholders’ deficit
            
            
            (
                199,239
            )Total
                liabilities and shareholders’ deficit
            
            $
            103,098




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




3


INTELLIHOME,
      INC.


STATEMENTS
      OF OPERATIONS


(Unaudited)





Nine
                Months Ended
              September
                30,
            
            Three
                Months Ended
              September
                30,2007
            
            2006
            
            2007
            
            2006REVENUES:Installation
                and monitoring revenues
            
            $
            700,510
            
            $
            564,906
            
            $
            196,912
            
            $
            161,054EXPENSES:Cost
                of monitoring and installation
            
            
            299,800
            
            
            244,665
            
            
            75,204
            
            
            80,340Compensation
                and benefits
            
            
            306,862
            
            
            294,180
            
            
            92,034
            
            
            88,871Truck
                expenses
            
            
            54,381
            
            
            36,439
            
            
            15,751
            
            
            11,482Truck
                expenses - related party
            
            
            3,750
            
            
            3,750
            
            
            1,250
            
            
            1,875General
                and administrative
            
            
            184,884
            
            
            79,818
            
            
            48,066
            
            
            27,706TOTAL
                EXPENSES
            
            
            849,677
            
            
            658,852
            
            
            232,305
            
            
            210,274LOSS
                FROM OPERATIONS
            
            
            (149,167
            )
            
            (93,946
            )
            
            (35,393
            )
            
            (49,220
            )OTHER
                INCOME / EXPENSEInterest
                income
            
            
            377
            
            
            -
            
            
            -
            
            
            -Other
                income
            
            
            10,758
            
            
            -
            
            
            5,455
            
            
            -Interest
                expense and finance charges
            
            
            (17,327
            )
            
            (20,251
            )
            
            (5,754
            )
            
            (6,818
            )TOTAL
                OTHER EXPENSES
            
            
            (6,192
            )
            
            (20,251
            )
            
            (299
            )
            
            (6,818
            )PROVISION
                FOR INCOME TAXES
            
            
            -
            
            
            -
            
            
            -
            
            
            -NET
                LOSS
            
            
            (155,359
            )
            
            (114,197
            )
            
            (35,692
            )
            
            (56,038
            )Preferred
                dividends accrued
            
            
            (16,031
            )
            
            (1,308
            )
            
            (5,444
            )
            
            (1,308
            )NET
                  LOSS AVAILABLE TO COMMON
                  SHARES
            
            $
            (171,390
            )
            $
            (115,505
            )
            $
            (41,136
            )
            $
            (57,346
            )Basic
                and diluted net loss per share
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.00
            )
            $
            (0.00
            )Basic
                and diluted weightedaverage
                shares
            
            
            21,297,692
            
            
            21,023,476
            
            
            21,300,000
            
            
            21,071,880





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




4




INTELLIHOME,
          INC.


STATEMENTS
      OF CASH FLOWS


(Unaudited)





For
                the Nine Months Ended September 30,2007
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (155,359
            )
            $
            (114,197
            )Adjustments
                to reconcile net lossto
                net cash used in operating activitiesDepreciation
                and amortization
            
            
            3,857
            
            
            3,852Non-cash
                expenses
            
            
            103,211
            
            
            28,238Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            12,997
            
            
            9,818Inventories
            
            
            1,146
            
            
            7,638Prepaid
                expense
            
            
            (390
            )
            
            (382
            )Accounts
                payable
            
            
            (31,455
            )
            
            (12,149
            )Credit
                cards payable
            
            
            (2,589
            )
            
            (1,216
            )Payroll,
                sales tax and other accrued liabilities
            
            
            (28,925
            )
            
            (15,598
            )Unearned
                revenue on contracts
            
            
            (2,464
            )
            
            (553
            )NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (99,971
            )
            
            (94,549
            )CASH
                FLOWS FROM INVESTING ACTIVITIES
            
            
            -
            
            
            -CASH
                FLOWS FROM FINANCING ACTIVITIESSale
                of common and preferred stock
            
            
            45,000
            
            
            255,000Advance
                from shareholder
            
            
            10,000
            
            
            -Proceeds
                from related party loan
            
            
            25,000
            
            
            -Principal
                payment on notes payable
            
            
            (34,785
            )
            
            (12,406
            )NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            45,215
            
            
            242,594NET
                INCREASE (DECREASE) IN CASH
            
            
            (54,756
            )
            
            148,045Cash,
                beginning of period
            
            
            77,557
            
            
            15,706Cash,
                end of period
            
            $
            22,801
            
            $
            163,751SUPPLEMENTAL
                CASH FLOW INFORMATION:Interest
                paid
            
            $
            15,631
            
            
            18,000Taxes
                paid
            
            
            -
            
            
            -SUPPLEMENTAL
                SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Increase
                in paid-in capital resulting from:Deferred
                offering costs, expenses and assets paid for by aSeries
                A preferred shareholder
            
            
            103,211
            
            
            28,238Decrease
                in retained earnings for preferred stock dividend
            
            
            16,031
            
            
            1,308Increase
                in par value of preferred stock
            
            
            -
            
            
            640





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




5





NTELLI OME NC


Notes
      to
      Financial Statements


September
      30, 2007


(Unaudited)





**NOTE
      1. - BASIS OF PRESENTATION**




The
      accompanying unaudited financial statements of IntelliHome, Inc., a Texas
      corporation (the “Company”), have been prepared in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and with the instructions to Form 10-QSB and Item 310(b)
      of Regulation S-B. They do not include all of the information and footnotes
      required by accounting principles generally accepted in the United States of
      America for a complete financial presentation. In the opinion of management,
      all
      adjustments, consisting only of normal recurring adjustments, considered
      necessary for a fair presentation, have been included in the accompanying
      unaudited financial statements. Operating results for the periods presented
      are
      not necessarily indicative of the results that may be expected for the full
      year.




These
      financial statements should be read in conjunction with the financial statements
      and footnotes for the year ended December 31, 2006, which are included as part
      of the Company’s registration statement (the “Registration Statement”) on Form
      SB-2 (SEC File 333-140204) declared effective July 12, 2007.




**NOTE
      2. - GOING CONCERN**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As reflected in the accompanying financial
      statements, the Company has incurred a loss of $155,359 for the nine months
      ended September 30, 2007 and had a retained deficit of $771,093 at September
      30,
      2007. In addition, the Company has not generated cash flows from operations
      for
      the years ended December 31, 2006 and 2005, and for the nine months ended
      September 30, 2007. The Company’s continued existence is dependent on its
      ability to attainment profitable operations and achieving a level of revenue
      adequate to support the Company’s cost structure. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      There is no assurance that the Company will be able to obtain profitable
      operations or additional financing to support the Company’s current operations.
      If management is not successful, the Company may have to substantially cut
      back
      its level of operations that could have an adverse effect on the financial
      position of the Company. The financial statements do not include any adjustments
      relating to the recoverability or classification of recorded asset amounts
      or
      the amount and classification of liabilities that might be necessary as a result
      of this going concern uncertainty.





**NOTE
      3. - PRIVATE PLACEMENT**





In
      January 2007, under the terms of the Private Placement Memorandum dated October
      19, 2005, 45 units were sold. Each unit consisted of 1,000 shares of the
      Company’s Common Stock, and 9,000 shares of the Company’s Preferred Series B
      convertible stock. The Company received $45,000 in cash for the units sold.





**NOTE
      4. - PAID-IN CAPITAL**





Pursuant
      to the terms of the subscription of the outstanding Series A Preferred Stock,
      during the nine months ended September 30, 2007, the principal holder of Series
      A Preferred Stock paid $103,211 of costs associated with the Registration
      Statement. Such payments resulted in increases in paid-in capital.




6




**NOTE
      5. - NOTES PAYABLE**





*Repayment
      of Line of Credit*





During
      the nine months ended September 30, 2007, the Company repaid in full the note
      payable relating to its existing bank line of credit and the line of credit
      was
      terminated. The Company is undertaking efforts to establish a new bank line
      of
      credit.





*Supplier
      Note Default*





At
      September 30, 2007, the Company was in default on a note payable to an equipment
      supplier. The note was originally dated July 28, 2004 for $69,240 at 7% interest
      and re-negotiated on December 13, 2006, after a 14-month term of default, with
      a
      new principal amount of $46,495, interest at 7%, and monthly payments of $6,798
      beginning December 27, 2006. The balance owing on the note at September 30,
      2007
      was $20,159. As a result of the default, the entire amount owing is due and
      payable. The note is uncollateralized and personally guaranteed by the President
      of the Company.





*Affiliate
      Loan*





During
      the quarter ended September 30, 2007, the Company received a $25,000 loan that
      was arranged through a banking arrangement of two directors of the Company.
      The
      loan is in the name of the directors, bears interest at 10.25% and is repayable
      in monthly installments of interest only with all unpaid principal and interest
      due March 19, 2008. The Company received the proceeds of the loan and agreed
      to
      pay all amounts owing under the loan as they come due.





*Shareholder
      Loan*





During
      the quarter ended September 30, 2007, the Company received a short-term advance
      of $10,000 from a shareholder. The loan had no specific repayment terms and
      was
      interest-free.





**NOTE
      6. - SUBSEQUENT EVENTS**




*Repayment
      of Shareholder Advance*





The
      $10,000 short-term advance by a shareholder was repaid in October
      2007.





*Conversion
      of Preferred Stock*





Subsequent
      to September 30, 2007, holders of an aggregate of 1,000,000 shares of the
      Company’s Series A Convertible Preferred Stock and 2,385,000 shares of the
      Company’s Series B Convertible Preferred Stock converted those shares into, and
      the Company issued, 3,385,000 shares of common stock. All accrued dividends
      on
      the converted Series B Convertible Preferred Stock were automatically
      extinguished on conversion.




7




**ITEM
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





**Forward-Looking
      Information**





This
      Form
      10-QSB quarterly report of IntelliHome, Inc. (the “Company”) for the nine months
      ended September 30, 2007, contains certain forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended, which are intended
      to be
      covered by the safe harbors created thereby. To the extent that there are
      statements that are not recitations of historical fact, such statements
      constitute forward-looking statements that, by definition, involve risks and
      uncertainties. In any forward-looking statement, where the Company expresses
      an
      expectation or belief as to future results or events, such expectation or belief
      is expressed in good faith and believed to have a reasonable basis, but there
      can be no assurance that the statement of expectation or belief will be achieved
      or accomplished.




The
      actual results or events may differ materially from those anticipated and as
      reflected in forward-looking statements included herein. Factors that may cause
      actual results or events to differ from those anticipated in the forward-looking
      statements included herein include the factors described in herein and in the
      Company’s other filings with the SEC, including the Risk Factors discussion
      included in the Company’s Registration Statement on Form SB-2 (SEC File No.
      333-140204, declared effective July 12, 2007).




Readers
      are cautioned not to place undue reliance on the forward-looking statements
      contained herein, which speak only as of the date hereof. The Company believes
      the information contained in this Form 10-QSB to be accurate as of the date
      hereof. Changes may occur after that date, and the Company will not update
      that
      information except as required by law in the normal course of its public
      disclosure practices.




Additionally,
      the following discussion regarding the Company’s financial condition and results
      of operations should be read in conjunction with the financial statements and
      related notes contained in Item 1 of Part 1 of this Form 10-QSB, as well as
      the
      Risk Factors and the financial statements for the fiscal year ended December
      31,
      2006 included in the Company’s Registration Statement on Form SB-2.




**Critical
      Accounting Policies**





The
      Company’s discussion and analysis of its financial condition and results of
      operations are based upon the Company’s financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America. The Company believes certain critical accounting
      policies affect its more significant judgments and estimates used in the
      preparation of its financial statements. A description of the Company’s critical
      accounting policies is set forth in the Company’s Registration Statement on Form
      SB-2. As of, and for the nine months ended, September 30, 2007, there have
      been
      no material changes or updates to the Company’s critical accounting policies as
      compared to those described in the Company’s Registration Statement on Form
      SB-2.





**Current
      Year Developments**





In
      January 2007, we completed a private placement of units that was partially
      completed in 2006. As a result, we sold units comprised of 45,000 shares of
      common stock and 405,000 shares of Series B Convertible Preferred Stock for
      $45,000. We have utilized proceeds of January 2007 sale of units, along with
      the
      proceeds received from the sale of units during 2006, to support planned growth
      of our Home Builder Program and renewed sales growth under our security
      monitoring and Contract Funding programs. Specifically, we have invested in
      inventory and hired personnel to support increased volume in our Home Builder
      Program. Based on discussions with various builders, we believe that we can
      secure exclusive relationships with one or more large production builders within
      selected markets if we can demonstrate the financial ability to support
      substantial volume increases under our Six Month Advantage Program in which
      we
      provide six months of complimentary security monitoring services to home buyers.
      Additionally, we have reinstated certain employee benefit programs, including
      health insurance, in order to attract and retain sales personnel necessary
      to
      renew the growth in sales under our security monitoring and Contract Funding
      program. As a result, we hired 2 additional sales employees and 2 additional
      installation employees during late 2006. During the June 2007 quarter, we let
      go
      or reduced to part-time, certain of the newly hired personnel based on
      performance. There can be no assurance that we will be successful in securing
      additional builder participation, or exclusive relationships with any such
      builders, or that we will be successful in growing sales under our security
      monitoring and Contract Funding program.




8





In
      January 2007, following completion of our private placement and pursuant to
      the
      terms of that private placement, we filed a registration statement on Form
      SB-2
      covering the resale of shares issued in the private placement. The registration
      statement was declared effective by the Securities and Exchange Commission
      on
      July 12, 2007 and, as a result, we are now subject to the reporting requirements
      of Section 15(d) of the Securities Exchange Act of 1934. Pursuant to the terms
      of our outstanding Series A Convertible Preferred Stock, during the nine months
      ended September 30, 2007, the principal holder of shares of our Series A
      Preferred Stock paid $103,211 of costs associated with the SB-2 registration
      statement. All such amounts paid by the holder of our Series A Preferred Stock
      are treated as increases in paid-in capital attributable to the Series A
      Preferred Stock.





In
      September 2007, two of our directors arranged a loan to us in the amount of
      $25,000 to support operations. The directors are the borrowers under the loan
      facility and we received the loan proceeds and agreed to repay the loan. The
      loan bears interest at 10.25% and is repayable in monthly installments of
      interest only with all unpaid principal and interest due March 19,
      2008.





In
      October 2007, holders of an aggregate of 1,000,000 shares of our Series A
      Convertible Preferred Stock and 2,385,000 shares of our Series B Convertible
      Preferred Stock converted those shares into, and we issued, 3,385,000 shares
      of
      common stock. All accrued dividends on the converted Series B Convertible
      Preferred Stock were automatically extinguished on conversion.





**Results
      of Operations**





During
      the nine months ended September 30, 2007, we realized a net loss of $155,359
      as
      compared to a net loss of $114,197 during the nine months ended September 30,
      2006.





The
      adverse change in operating results was principally attributable to increased
      operating costs associated with hiring of personnel, increased promotional
      activities and increases in general and administrative costs, all relating
      to
      our planned growth.





*Revenue.* Revenue
      for nine months ended September 30, 2007 increased 24% to $700,510 from $564,906
      during nine months ended September 30, 2006. The principal components of
      revenues for the periods were as follows:





Nine
                Months Ended
              September
                30,2006
            
            2007Installation
                Fees
            
            $
            476,085
            
            $
            596,589Monitoring
                Fees
            
            
            64,065
            
            
            69,285Contract
                Funding
            
            
            24,756
            
            
            34,636Total
            
            $
            564,906
            
            $
            700,510





The
      increase in Installation Fees was primarily attributable to increased marketing
      efforts facilitated by our hiring of additional installation and marketing
      personnel following the receipt of funding from our 2006 Private Placement.
      With
      the downturn in new housing construction as a result of disruption of the
      mortgage markets, our Installation Fees derived from our builder programs may
      be
      adversely affected pending a restoration of stability and growth in the new
      home
      construction market. Because we have a very small share of this market at this
      time we do not believe the downtown in the market has materially affected our
      Installation Fees to date or that the downturn will materially affect our
      Installation Fees in the foreseeable future. However, should the construction
      downtown deepen or continue over an extended period, we may experience slowing
      and stagnant growth in Installation Fees in the builder market.




9





The
      increase in Contract Funding revenues was primarily attributable to a renewed
      emphasis on our Contract Funding business which accompanied the commencement
      of
      sales of contracts to Central Security Group. The volume of monitoring contracts
      eligible to be purchased by Central Security Group is greater than that under
      our previous arrangement with ADT Security.





The
      increase in monitoring fees was attributable to the renewed emphasis on
      generation of monitoring contracts and higher retentions of monitoring contracts
      resulting from a decline in contracts sold to ADT Security prior to the
      commencement of our relationship with Central Security Group.





*Cost
      of Monitoring and Installation.* Cost
      of
      monitoring and installation for the nine months ended September 30, 2007
      increased 22.5% to $299,800 from $244,665 during the nine months ended September
      30, 2006.





As
      a
      percentage of revenues, cost of monitoring and installation decreased to 42.8%
      in the nine months ended September 30, 2007 from 43.3% in the nine months ended
      September 30, 2006. The increase in cost of monitoring and installation was
      attributable to increased business and the decrease as a percentage of revenues
      was principally attributable to improved pricing from various suppliers,
      including Central Security Group.





*Truck
      Expense.* Truck
      expense, reflecting the cost of ownership and operation of our installation
      and
      service vehicles, increased by 44.6% to $58,131 for the nine months ended
      September 30, 2007 from $40,189 for the nine months ended September 30, 2006.
      As
      a percentage of revenues, truck expense increased from 7.1% in the 2006 period
      to 8.3% in the 2007 period.





The
      increase in truck expense was principally attributable to higher gas costs
      and
      maintenance costs, the addition of a leased truck and costs arising from
      vehicles operated by additional personnel hired during the fourth quarter of
      2006.





*General
      and Administrative Expense.* General
      and administrative expense increased by 131.6% to $184,884 for the 2007 period
      from $79,818 for the 2006 period. As a percentage of revenues, G&A increased
      from 14.1% in the 2006 period to 26.4% in the 2007 period.





The
      increase in G&A during the 2007 period was principally attributable to the
      commencement of certain promotional efforts and investments to support planned
      growth in all market segments beginning the fourth quarter of 2006 following
      the
      receipt of funding from the 2006 Private Placement. As a result of those
      efforts, we anticipate that our G&A will continue at an increased level
      during 2007.





*Compensation
      and Benefits.* Compensation
      and benefit expenses increased by 4.3% to $306,862 for the 2007 period from
      $294,180 for the 2006 period. As a percentage of revenues, compensation and
      benefit expenses decreased from 52.1% in the 2006 period to 43.8% in
      2007.





The
      increase in compensation and benefit expense was principally attributable to
      the
      hiring of additional personnel and reinstating certain benefit programs during
      the fourth quarter of 2006 following the receipt of funding from the 2006
      Private Placement in order to attract personnel to support increased sales
      efforts under the security monitoring and Contract Funding programs and sales
      and service of additional builders in our Home Builder Program. During the
      June
      2007 quarter, we let go, or reduced to part-time, certain of the newly hired
      personnel for performance reasons. Accordingly, our compensation expense is
      expected to decline on a temporary basis but we plan to hire additional
      personnel to support planned growth and expect compensation expense to rise
      as
      additional personnel is hired.




10





*Interest
      Expense.* Interest
      and finance charges decreased 14.4% to $17,327 for the 2007 period from $20,251
      for the 2006 period. The decrease in interest expense was attributable to
      decreased debt levels.





**Financial
      Condition**





*Cash
      Position and Short-Term Liquidity.* At
      September 30, 2007, we had a cash balance of $22,801 and a working capital
      deficit of $204,948 as compared to a cash balance of $77,557 and a working
      capital deficit of $184,473 at December 31, 2006.





Operations
      used cash in the amount of $99,971 during the nine months ended September 30,
      2007 as compared to $94,549 used in operations during the nine months ended
      September 30, 2006. The increase in cash used in operations during the 2007
      period was principally attributable to the increase in net loss during 2007
      and
      reductions of various payables, partially offset by the payment of certain
      expenses by a holder of our Series A Preferred Stock.





Our
      short-term financing requirements have, in recent periods, been financed
      primarily through short-term borrowing from our principal officer, Mark Trimble,
      borrowings on credit cards, borrowings under a line of credit, borrowings from
      a
      supplier and borrowings arranged through directors. During the first nine months
      of 2007 we paid off our existing line of credit, secured a $25,000 loan through
      two directors and we are presently seeking to establish a new line of credit
      and
      we are evaluating the possible sale of a portion of our monitoring contracts
      to
      support short-term financing needs. With the receipt of funds from our 2006
      private placement, cost control measures, anticipated increases in revenues
      and
      proceeds from a new line of credit and/or sales of monitoring contracts, we
      anticipate that we will be able to meet our short-term financing requirements
      without additional borrowings from affiliates notwithstanding our continuing
      working capital deficit. We have no commitments from Mr. Trimble, bank lenders,
      prospective purchasers of monitoring contracts or others to provide any
      additional funding that may be necessary to support operations in the near
      term.





Included
      in our short-term debt at September 30, 2007 is credit card debt in the amount
      of $95,136 relating, primarily, to inventory purchases. Such amounts have no
      formal payment terms.





*Unearned
      Revenue on Contracts.* We
      routinely offer security monitoring services in conjunction with our sale and
      installation of security systems. Contracts for security monitoring services
      typically range from three months to thirty-six months. Proceeds received from
      the sale of such contracts relating to periods for which services have not
      yet
      been provided are classified as unearned revenue on contracts and are reflected
      in current or non-current liabilities based on the period in which services
      are
      required to be rendered. At September 30, 2007, unearned revenue on contracts
      totaling $8,008 was classified as current liabilities and $909 was classified
      as
      non-current liabilities.





*Financing
      Facilities* .
      At
      September 30, 2007, financing of our business was provided through multiple
      sources, including a supplier loan, a loan arranged through two directors and
      a
      variety of credit card lending arrangements.





At
      September 30, 2007, our bank line of credit had been repaid in full and we
      were
      seeking to establish a new bank line of credit.




11




At
      September 30, 2007, we had a note payable in the amount of $20,159 payable
      to a
      supplier payable in monthly installments of $6,798 and providing for interest
      at
      7%. We were not making payments on the note, and the note was in default, at
      September 30, 2007. The note is unsecured and is guaranteed by our President
      and
      principal shareholder.





At
      September 30, 2007, we had available credit of approximately $114,000 under
      multiple credit card accounts, of which approximately $95,136 was borrowed,
      including interest. Those accounts each provide for varying interest rates
      and
      minimum monthly payments with no stated maturity.





At
      September 30, 2007, we owed $25,000 on a bank credit facility arranged by two
      directors from which we received loan proceeds and which we guaranteed. The
      loan
      bears interest at 10.25% and is payable in monthly installments of interest
      only
      with all unpaid principal and interest due March 19, 2008.





*Financing
      Transactions.*  In
      order
      to finance certain short-term requirements and to facilitate our planned growth
      in our Home Builder Program and efforts to grow revenues from our Contract
      Funding, during 2005 and 2006 and the first quarter of 2007, we entered into
      several transactions.





In
      September 2005, Mr. Trimble agreed to convert all amounts owing to him, totaling
      $38,400, into 2,101,645 shares of common stock, or an effective conversion
      price
      of $0.018 per share (after giving effect to the October 2005 stock
      split).





In
      September 2005, we issued a total of 2,462,832 shares of common stock (after
      giving effect to the October 2005 stock split) for aggregate consideration
      of
      $45,000. The proceeds from that offering were used to support working capital
      needs and to pay down certain debts.





In
      October 2005, we issued 6,000,000 shares of Series A Preferred Stock in exchange
      for an agreement by the purchaser to pay all expenses associated with conducting
      a private placement, filing a resale registration statement with the Securities
      and Exchange Commission and facilitating the development of a public market
      for
      our common stock, as well as preparing related corporate documents, at a total
      estimated cost of more than $200,000 but not to exceed $300,000.





In
      August
      2006, we sold Units in a private placement for total net proceeds of $255,000.
      The Units sold in the offering consisted of an aggregate of 255,000 shares
      of
      common stock and 2,295,000 shares of Series B Preferred Stock. Subsequently,
      in
      January 2007, we received an additional $45,000 from the sale of Units resulting
      in the issuance of an additional 45,000 shares of common stock and 405,000
      Shares of Series B Preferred Stock.





*Capital
      Requirements.*  We
      have,
      in recent years, required financial support of our principal shareholder to
      provide necessary working capital and have, in certain instances, extended
      payments of suppliers beyond their normal payment terms. In order to support
      our
      plan to grow our Home Builder Program and to restore our Contract Funding
      revenues, we must hire sales and installation personnel and invest in inventory.
      In order to facilitate planned hiring, we must reactivate certain benefit plans,
      including our health insurance plan. We undertook various financing transactions
      during 2005 and 2006 to support our planned operations, including raising
      $345,000 of equity pursuant to the 2005 sale of stock and the 2006 private
      placement. During 2007, we received proceeds of a $25,000 loan arranged through
      two directors. We are presently undertaking efforts to establish a new bank
      line
      of credit facility and sell certain monitoring contracts to support operations.
      We anticipate that the financing provided by the 2005 and 2006 sales of stock,
      together with funds from operations, cost control measures, establishment of
      a
      new bank line of credit and selected sales of monitoring contracts, will be
      adequate to meet our capital requirements for at least the next 12 months,
      including servicing our short-term debt and investments in personnel, inventory
      and assets. We have no commitments, however, to provide a new bank line of
      credit, sell monitoring contracts or otherwise provide additional funding to
      support operations.




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*Capital
      Expenditures and Commitments.*  Our
      capital expenditures have historically been limited to selected purchases of
      vehicles, equipment and furniture to support our operations. Additionally,
      we
      have previously purchased alarm monitoring accounts and may do so in the future.
      During the nine months ended September 30, 2007, we had no capital
      expenditures.





At
      September 30, 2007, we had no capital expenditure commitments but have budgeted
      approximately $2,000 for management software purchases and $25,000 for vehicles
      and outfitting of vehicles with tools and purchases of computers and office
      technology to support planned growth.





*Contractual
      Obligations.*  At
      September 30, 2007, our contractual obligations requiring determinable future
      payments were limited to amounts payable under the promissory note and supplier
      loan as discussed above. We lease our executive offices from an unrelated third
      party under a month-to-month lease and lease a vehicle from our President
      pursuant to a lease running through September 2007. Office lease payments are
      presently $1,250 per month and vehicle rental payments are presently $625 per
      month.





In
      addition to the foregoing obligations, we may be subject to charge-backs from
      time to time based on collections and retention rates on monitoring accounts
      sold to monitoring service company. Moreover, we may elect to sell our rights
      under certain payment streams to the monitoring company subject to certain
      rights of the monitoring company to recover some or all payments made based
      on
      our ongoing compliance with various requirements and the actual collection
      results with respect to accounts covered by such arrangements. In either of
      those events, amounts owing to us in the future by the monitoring company may
      be
      reduced or, in the alternative, we may be obligated to repay to the monitoring
      company certain amounts previously paid us by the monitoring company. We have
      not historically experienced any material obligations to repay amounts paid,
      or
      offset future payments of, monitoring companies and no reasonable estimate
      can
      be made as to whether any such obligations will arise in the future and, if
      so,
      the amount of such obligations.





**Off-Balance
      Sheet Arrangements**





The
      Company had no off-balance sheet arrangements at September 30,
      2007.





**Inflation**





The
      Company believes that inflation has not had a significant impact on operations
      since inception.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





As
      of the
      end of the period covered by this report, we have evaluated the effectiveness
      of
      the design and operation of our disclosure controls and procedures under the
      supervision and with the participation of our chief executive officer (“CEO”)
      who also serves as our chief financial officer. Based on this evaluation, our
      management, including our CEO, concluded that our disclosure controls and
      procedures were not effective at September 30, 2007.





During
      the quarter ended September 30, 2007, there were no changes in our internal
      controls over financial reporting that materially affected, or are reasonably
      likely to materially affect, internal controls over financial
      reporting.




13




In
      connection with the quarterly review for the period ended September 30, 2007,
      our independent registered public accounting firm informed us that we have
      significant deficiencies constituting material weaknesses as defined by the
      standards of the Public Company Accounting Oversight Board. The accounting
      firm
      noted that adequate segregation of duties does not exist in our financial
      reporting process, as our President and CEO also functioned as our CFO. The
      President performed these duties with assistance from a part time consultant.
      Accordingly, the preparation of financial statements and the related monitoring
      controls surrounding this process were not segregated.





**PART
      II**





**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





In
      October 2007, 19 holders of an aggregate of 1,000,000 shares of the Company’s
      Series A Convertible Preferred Stock and 2,385,000 shares of the Company’s
      Series B Convertible Preferred Stock converted those shares into, and the
      Company issued, 3,385,000 shares of common stock.





The
      shares were issued pursuant to Section 4(2) of the Securities Act and the rules
      and regulations promulgated thereunder on the basis that such transaction did
      not involve a public offering. No sales were commissions were paid in connection
      with the issuance of the shares.





**ITEM
      6.**  **EXHIBITS**


ExhibitNumber
              
              Description31.1
              
              Certification
                  of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of
                  200232.1
              
              Certification
                  of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act of
                  2002




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**SIGNATURES**





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




INTELLIHOME,
              INC.By:
            /s/ Mark
              TrimbleMark
                Trimble
              President,
                Chief Executive Officer and
              Chief
                Financial OfficerDate: November 9, 2007




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