HouseRaising 10QSB 2005 Q1 Quarterly report (small business)

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 March 31, 2005

[ ]

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)

TECHNOLOGY CONNECTIONS, INC.

(Former name of registrant)

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 [ ]

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 April 29, 2005

Common Stock ($.001 par value) 38,126,787

Preferred Stock Class A ($.001 par value) 1,000,000

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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 unaudited 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. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.

Copies of such material may be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., 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.

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HOUSERAISING, INC.

FORM 10-QSB

For the Quarter ended March 31, 2005

TABLE OF CONTENTS

	Page

Cautionary Statement and Risk Factors that May Affect Future Results	4

PART I

ITEM 1. Selected Financial Statements	5
Balance Sheet - March 31, 2005 (unaudited)	5
Statements of Operations - Three Months Ended March 31, 2005 and 2004 (unaudited)	6
Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 (unaudited)	7
Notes to Financial Statements (unaudited)	8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operations	14
ITEM 3. Controls and Procedures	17

PART II

ITEM 1. Legal Proceedings	18
ITEM 2. Changes in Securities	18
ITEM 3. Default Upon Senior Securities	18
ITEM 4. Submission of Matters to a Vote of Security Holders	18
ITEM 5. Other Information	18
ITEM 6. Exhibits and Reports on Form 8-K	19

Signatures	20

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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:

·	Changes in general and local economic and market conditions where our operations are conducted and where prospective purchasers of homes live;

·	the effects of weather, natural disasters or global developments, including terrorist acts and war on terrorism negatively affecting local home building industry and adversely affecting new home installations market;

·	the timing and extent of changes in interest rates;

·	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 home builders 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 personnel in order to meet the goals set forth in its business plan and rollout of Zone operations;

·	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; if we are not able to obtain adequate insurance against these claims, we 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 Company may not complete the automated design/build system 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’s success is heavily dependent upon the continued active participation of its President, Robert V. McLemore;

·	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 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;

·	the risk that the Company will be unable to obtain needed 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, occupational safety and health acts, workmen’s compensation statutes, unemployment insurance and governmental fees and assessments);

·	HRI is a development stage company that has an accounting opinion that raises substantial doubt about its ability to continue as a going concern (see independent auditor’s report and notes on management’s plan for more details);

·	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 (A Development Stage Company)
Consolidated Condensed Balance Sheet (unaudited)
As of March 31, 2005

ASSETS

CURRENT ASSETS
Cash and Cash Equivalents	$	12,254
Prepaids		510,917
Accounts Receivable		26,000
Other Current Assets		63,847
TOTAL CURRENT ASSETS		613,018

PROPERTY AND EQUIPMENT
Property and Equipment		200,947
Accumulated Depreciation		(96,941	)
Net Property and Equipment		104,006

OTHER ASSET
Other Assets		1,853
Capitalized Software		8,804,289
Net Other Assets		8,806,142
TOTAL ASSETS	$	9,523,166

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses	$	400,880
Interest Payable		19,307
Notes Payable		967,622
TOTAL LIABILITIES		1,387,809

STOCKHOLDERS' EQUITY
Preferred Stock ($.001 par value, 5,000,000 authorized:
none issued and outstanding)
Preferred Stock Class A Convertible ($.001 par value, 5,000,000 authorized:		1,000
1,000,000 issued and outstanding)		-
Common Stock Series A ($.001 par value, 90,000,000 shares authorized:		-
36,459,638 shares issued and outstanding)		37,449
Common Stock Subscribed but not Issued		1,946,035
Additional Paid-in-Capital		8,839,553
Retained Deficit		(2,688,680	)
TOTAL STOCKHOLDERS' EQUITY		8,135,357
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,523,166

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

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HouseRaising, Inc. and Subsidiaries (A Development Stage Company)
Consolidated Statement of Operations (unaudited)
For the three months ended March 31, 2005 and 2004


	2005			2004(a)
SALES AND COST OF SALES:
Sales	$	1,590		$	39,026
Cost of sales		1,248			28,471
Gross Profit		342			10,555

OTHER REVENUES:
Sales and service fees		8,462			65,262
Other income		94			6,150

NET REVENUES		8,898			81,967

OPERATING EXPENSES:
Selling, general and administrative		467,114			104,905
Consulting fees		513,349			153,001
		980,463			257,906

OTHER EXPENSE:
Interest expense		9,247			2,793

NET LOSS	$	(980,812	)	$	(178,732	)

Net Loss Per Common Share
Basic & Fully Diluted	$	*			*

Weighted Average Common
Shares Outstanding		37,010,437			17,200,002(b	)

* = Less than ($.01)
(a) = Consolidated HouseRaising, Inc. and Technology Connections, Inc.
(b) = Reflects solely HouseRaising, Inc. shares

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

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HouseRaising, Inc. and Subsidiaries (A Development Stage Company)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 2005 and 2004


	2005			2004(c)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(980,812	)	$	(178,732	)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation		7,558			2,681
Common stock subscribed for services rendered		1,086,047			190,002
(Increase) decrease in operating assets:		(88,000	)		--
Accounts receivable		(59	)		--
Capitalized software		(233,050	)		(9,889	)
Excess of costs over billings on uncompleted contracts		(4,204	)		(17,135	)
Accounts payable and accrued expenses		(5,343	)		(55,704	)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(217,863	)		(68,777	)

CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchase of property and equipment		(25,515	)		(706	)
NET CASH (USED IN) INVESTMENT ACTIVITIES		(25,515	)		(706	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds for sale of common stock		-			-
Proceeds from capital contributions		-			44,667
Borrowings on notes payable		230,865			25,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		230,865			69,667

NET INCREASE IN CASH AND
CASH EQUIVALENTS		(12,513	)		184

CASH AND CASH EQUIVALENTS:
Beginning of period		24,767			382

End of period	$	12,254		$	566

(c) - Consolidated HouseRaising, Inc. and Technology Connections, Inc.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto incorporated by reference in HRI’s Annual Report on SEC Form 10-KSB for the year ended December 31, 2004.

In the opinion of HRI’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to present fairly the financial position of HRI and its subsidiaries as of March 31, 2005 and the results of their operations for the three months ended March 31, 2005 and 2004 and their cash flows for the three months ended March 31, 2005 and 2004. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year.

When required, certain reclassifications are made to the prior period’s consolidated financial statements to conform to the current presentation.

(2) Summary of Significant Accounting Policies

Business Activity—HouseRaising, Inc. (a Development Stage Company) and Subsidiaries are in the business of selling, designing and managing design/build and renovation projects and home building solutions in the residential homebuilding market for homebuyers and homebuilders. HouseRaising, Inc. merged into Technology Connections, Inc. and changed the name to HouseRaising, Inc. (The Company).

The Company provides a proprietary turnkey home design and build management system that it markets to regional homebuilders. Its customers are principally located in the Southeast USA with a current concentration in North and South Carolina.

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

* HouseRaising of Greater Charlotte, LLC—100% ownership by the Company

* HouseRaising of Greenville, LLC—100% ownership by the Company

* HouseRaising of Columbia, LLC—100% ownership by the Company

* HouseRaising of Asheville, LLC—100% ownership by the Company

* HouseRaising of Wilmington, LLC—100% ownership by the Company

* HouseRaising of Myrtle Beach, LLC—100% ownership by the Company

* HouseRaising of Charleston, LLC—100% ownership by the Company

These limited liability companies provide managerial services to the Company’s homebuilding operations. These limited liability companies operate within specific guidelines and operating procedures established by HouseRaising, Inc. documents. The Company enters into a fee based management contract with each homebuilder that is required to be properly licensed. Each custom, design and built home is financed in the name of the homebuyer.

In July 2003, the Company formed 2 subsidiaries, HouseRaisingAcademy, LLC and HouseRaisingUSA, LLC. HouseRaisingAcademy, LLC develops and manages the Company’s internet based E-Learning and Homebuilder Management System (named system C) currently in development. HouseRaisingUSA, LLC is responsible for owning, organizing and operating the regional limited liability companies which design and build customer homes for homebuyers in their respective area.

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 GAAP 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.

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(2) Summary of Significant Accounting Policies (continued)

Revenue Recognition—The Company’s revenue is derived primarily from providing the design and build management system to homebuilders on a percentage of such home’s contract price. The sales and service fee portion is recognized in the initial construction stage and approximates 10% of the home’s contract price. The balance of the Company’s management fee approximates 50% of the home’s profit and is recognized at closing. Revenues from construction contracts are recognized on the completed-contract method. 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. 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.

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 assets will commence amortization when the asset is considered to be in the post-implementation phase (i.e. when the development of internal use software is completed) which is projected to be in 2005. At such time, the capitalized software costs will be amortized on a straight-line basis over the estimated economic life of the asset to be determined.

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.

S-8 Share Payments—The Company currently provides S-8 registered shares as compensation for services rendered as a means of conserving cash until it obtains debt or equity financing. The Company accrues the value of services rendered as an expense or capital expenditure (when it is readily determinable) 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. In some cases there are “true-up” provisions which would result in more or less shares to be issued; however, the expense or capital expenditure would have already been reflected on the company’s financial statements at the time services were rendered.

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

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. Accordingly, this presentation has been adopted for the period presented. There were no adjustments required 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.

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(2) Summary of Significant Accounting Policies (continued)

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. 121,“Accounting for the Impairment of Long-Lived Assets to be Disposed of” 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.

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.

(3) Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 143,“Accounting for Asset Retirement Obligations” which addresses the accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value cannot be made. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company does not expect SFAS No. 143 to have a material effect on its consolidated financial condition or consolidated cash flows.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 generally establishes a standard framework to measure the impairment of long-lived assets and expands the Accounting Principles Board (“APB”) 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” to include a component of the entity (rather than a segment of the business). SFAS No.144 is effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company does not expect SFAS No. 144 to have a material effect on its consolidated financial condition and consolidated cash flows.

In April of 2002, Statement of Financial Accounting Standards (SFAS) No. 145 was issued which rescinded SFAS Statements 4, 44, and 64, amended No. 13 and contained technical corrections. As a result of SFAS No. 145, gains and losses from extinguishments of debt will be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30, that they are unusual and infrequent and not part of an entity’s recurring operations. The Company adopted SFAS on January 1, 2004. The Company does not expect SFAS No. 145 to have a material effect on its financial condition or cash flows.

In July of 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 146, which addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3,“Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 revises the accounting for certain lease termination costs and employee termination benefits, which are generally recognized in connection with restructuring charges. The provisions of SFAS 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company does not expect SFAS No. 146 to have an impact its financial statements as adopted on January 1, 2004.

In November 2002, the Financial Accounting Standards Board issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantee, Including Indirect Guarantees or Indebtedness of Others”, which addresses the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees. FIN 45 also requires the recognition of a liability by a guarantor at the inception of certain guarantees that are entered into or modified after December 31, 2002.

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 148,“Accounting for Stock-Based Compensation Transition and Disclosure”—an amendment to SFAS No. 123 (SFAS No. 148), which provides alternative methods of transition for companies voluntarily planning on implementing the fair value recognition provisions of SFAS No. 123. SFAS No. 148 also revises the disclosure provisions of SFAS No. 123 to require more prominent disclosure of the method of accounting for stock-based compensation, and requiring disclosure of pro forma net income and earnings per share as if the fair value recognition provisions of SFAS No. 123 had been applied from the original effective date of SFAS No. 123. The Company adopted the disclosures provisions of SFAS No. 148 for the quarters ending after December 15, 2002.

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(3)Recent Accounting Pronouncements (continued)

In January 2003, the EITF released Issue No. 00-21, (EITF 00-21),“Revenue Arrangements with Multiple Deliveries”, which addressed certain aspects of the accounting by a vendor for arrangement under which it will perform multiple revenue-generating activities. Specifically, EITF 00-21 addresses whether an arrangement contains more than one unit of accounting and the measurement and allocation to the separate units of accounting in the arrangement. EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of this standard will not have an impact on the Company’s financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 149,“Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The Company does not believe that there will be any impact on its financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 150,“Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how companies classify and measure certain financial instruments with characteristics of both liabilities and equity. It requires companies to classify a financial instrument that is within its scope as a liability (or an asset in some characteristics). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. The standard will not impact the Company’s financial statements.

(4) Income Taxes

Due to the operating loss and the inability to recognize an income tax benefit therefrom, there is no provision for current or deferred federal or state income taxes for the periods ended March 31, 2005 and 2004.

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, 2004 is as follows:

Total deferred tax assets	$	648,000
Valuation allowance		(648,000	)

Net deferred tax asset	$

The reconciliation of income taxes computed at the federal statutory income tax rate to total income taxes for the periods ended March 31, 2005 and 2004 is as follows:

	2005			2004
Income tax computed at the federal statutory rate		34	%		34	%
State income taxes, net of federal tax benefit		4	%		4	%
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.

As of December 31, 2004, the Company had federal and state net operating loss carryforwards in the amount of approximately $1,700,000, which expire at various times through the year 2025.

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(5) Going Concern

As shown in the audited financial statements for the year ended December 31, 2004 (incorporated by reference to HRI’s Annual Report on SEC Form 10-KSB for year ended December 31, 2004), the Company has suffered recurring losses from operations to date. During 2004, the Company had minimal revenues, a net loss of $927,196, a net deficiency of $1,707,822 and a net working capital deficit of $628,974.

Management believes that actions presently being taken to raise equity capital, seek strategic relationships and alliances, and build its marketing efforts to generate positive cash flow provide the means for the Company to continue as a going concern. As of the end of the first quarter of 2005, the Company has already obtained new contracts totaling $2,436,707 of sales in incomplete construction projects. On average these new construction projects are completed within 9 months. Additionally, the Company will continue to rely upon equity infusions from investors in order to improve liquidity and sustain operations. The company has investors that have indicated a willingness to contribute equity to finance on-going operations and the Company did obtain $12 million in funding in March, 2005 that it declined as management believes they will obtain better financing terms from interested prospective investors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(6) Acquisition and related reorganization

On February 19, 2004, HouseRaising, Inc., a Delaware corporation, Technology Connections, Inc., a North Carolina corporation, and the shareholders of HouseRaising, Inc., executed an Agreement and Plan of Merger (“the Merger Agreement”), pursuant to which HouseRaising, Inc. agreed to merge with and into Technology Connections, Inc., (“the Merger”) with the HouseRaising, Inc. Stockholders receiving in the aggregate 27,288,732 shares of common stock and 1,000,000 shares of Class A Convertible Preferred Stock of Technology Connections, Inc. in exchange for their shares of HouseRaising, Inc. In addition, pursuant to the Merger Agreement, Technology Connections, Inc. agreed to change its corporate name from “Technology Connections, Inc.” to “HouseRaising, Inc.” prior to closing.

The shares of Class A Convertible Preferred Stock to be issued in the Merger are convertible into ten (10) shares of fully paid and non-assessable shares of common stock five (5) years after the date of issuance, and they have a class vote to approve or disapprove any merger, sale of assets, combination or reorganization involving HouseRaising, or other fundamental corporate transaction involving HouseRaising, Inc. In addition, each share of Class A Convertible Preferred Stock issued in the Merger is entitled to ten (10) votes per share on all matters on which common stock votes upon issuance.

On August 31, 2004, the Merger was consummated when Articles of Merger and name change were filed by the parties with the Secretary of State in the State of North Carolina.

The acquisition was accounted for as a reverse merger wherein HouseRaising, Inc. was the accounting acquirer and Technology Connections, Inc. was the legal acquirer. Accordingly, the accounting acquirer recorded the assets purchased and liabilities assumed as part of the merger and the entire equity section of the legal acquirer was eliminated with negative book value acquired offset against the paid in capital of the accounting acquirer, in accordance with SFAS #141.

(7) Non-qualified Stock Compensation Plan

On April 6, the Company adopted Amendment Number 1 to its 2004 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 an additional 1,000,000 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.

(8) Development Stage Company

The Company is in the development stage as of March 31, 2005 and to date has had no significant operations. Recovery of the Company’s assets is dependent on future events, the outcome of which is indeterminable. In addition, successful completion of the Company’s development program and its transition, ultimately, to attaining profitable operations is dependent upon obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure.

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(9) Commitments

The Company leases its office facilities. The Company also has one vehicle under lease that has been classified as an operating lease expiring in September 2006. Payment due under the lease is $1,384 per month.

Rent expense was $78,574 and $79,024 in 2004 and 2003, respectively.

Future minimum rental payments as of December 31, 2004 in the aggregate and for each of the two succeeding years are as follows:

Year Amount

2005 $ 78,574

2006 $ 78,574

Total $157,148

(10) Notes Payable

Notes payable at March 31, 2005 consist of the following:

Unsecured note payable to an unrelated party.

Bearing 8% interest. $ 5,640

Unsecured note payable to an unrelated party.

Bearing 8% interest. $13,177