HouseRaising, Inc. (OTCBB: HRAI)

Dear Reader, 

Just this morning CNN reported that New Orleans residents had gathered to challenge Mayor Ray Nagin as to why more hasn’t been done to provide housing for the displaced residents of Hurricane Katrina.  It’s hard to imagine people living in hotels or crammed in with family as we place Christmas lights on our comfortable residences safely out of harm’s way.

Today’s feature re-introduces you, our dear reader, to one of the more compelling stories we’ve covered in the past year, HouseRaising, Inc. (OTCBB: HRAI), which has multiple revenue streams in the custom homebuilding market.  A lot has happened for this company, and now, this homebuilding efficiency model is looking to the battered Gulf Coast as an extension of the company’s business plan.

It will be interesting to see if HouseRaising can effectuate change using its technology and know-how. Superficially speaking, it would seem that a company whose hallmark is to control costs and maximize product in the house building industry would seem a perfect fit. Factor in that HouseRaising’s new CEO is Greg Wessling, formerly a top exec at Lowe’s, and we’ve become optimistic as to what this dynamic company can accomplish.

All this is very interesting indeed, but from a stock valuation standpoint one fact rings loudly.  HouseRaising’s market cap is pert' near its book value according to its latest 10Q.  If you don’t know why this is significant, call your stockbroker and say simply this:  “A former senior executive at Lowe’s has just taken over as CEO of a company looking to help rebuild homes in the Gulf Coast region and the company’s market cap is roughly equal to its book value.”  That should do it.

Please take a moment to review the updated profile below… or forward it to your broker.
 

About HouseRaising, Inc.

HouseRaising Inc. (HRI) (OTCBB: HRAI) is a gathering of people in a community to help one of its members build a house.

What They Are:
Functioning exclusively in the custom homebuilding arena, HouseRaising, Inc. is a Managed Service Provider that will revolutionize the way custom homes are designed and built by small homebuilders. 

The Amish and other early Americans learned to depend on each other and work together to complete challenging projects like building a house. Those community efforts were led by a team leader, managing the project. However, in today’s homebuilding environment, without the team leader, the building of a customer’s dream home has become a complex undertaking that most homeowners describe as costly and unpleasant.  Today, HouseRaising is that team leader- operating as a 21st century company focused on recreating the proud tradition of organizing groups of experts to help customers design and build unique homes.

What They Do:
Performing the role of “General Manager,” HouseRaising manages design and build projects with services that improve the quality of the home and the homebuilding experience. Depending on the design structure selected by the homeowners, HouseRaising can lower the home’s total costs by up to 10%. By providing managed services to homebuyers, builders and vendors, HRI turns complicated custom home and renovation projects into financially sound and fun endeavors. 

How They Do It:
Operating from a national control center and zone design centers located throughout the country, HouseRaising personnel utilize a patent-pending process to define and manage every step in designing and building custom homes. 

HouseRaising sells its managed services to both the home buyer and the home builder.  Because HouseRaising does not compete with custom homebuilders as a competitive builder, and because HouseRaising does not share in the builder's profits, the company’s approach of linking builders, buyers and vendors into a single contract for services represents the interest of homebuyers, vendors and builders alike.  Homebuyers who have selected a local builder as well as buyers who seek a quality builder to build their home can contract with HRI to manage the project for both of them. 
 

HRAI's Market Potential:
Of the 500,000 custom-home projects built by 250,000 small builders in America each year, every one of them could benefit from HouseRaising’s managed services.  HouseRaising sells its services through a two-channel marketing and sales approach. 

Channel #1:  HRI approaches the small custom builder who has existing buyer clients who need HouseRaising’s services. 

Channel #2:  HouseRaising markets its services directly to homebuyers who need quality builders for their projects.
When 1% of the buyers or builders developing the 500,000 projects choose HRI to manage their projects, HouseRaising will create homes valued at $2.25 billion with cash flow of $90 million. Management believes that when HouseRaising is fully operational and properly presented to buyers and builders across America, it is realistic to expect that between 1% and 5% of the 500,000 projects will use these services, making HouseRaising one of the largest companies in the industry. 

• HouseRaising USA (HR-USA) functions as a marketing channel directed to custom homebuyers.
• HR Custom Builder Division works directly with custom homebuilders around the nation.
• HouseRaisingAcademy (HRA), is an Internet-based technology company providing management software, support structure and consulting for all HouseRaising activities.

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HouseRaising’s marketing focus is to operate under the radar screens of large builders and become ... "A national company  of local homebuilders.”  Up to 6,000 small homebuilders selling and building 2 or 3 homes or 4 to 6 renovation projects annually in out of the way places, is expected to produce sales revenues equal to some of the nation’s largest homebuilders.  HouseRaising establishes builder relationships in large cities, but its emphasis is on developing multiple-builder relationships in small towns across America

HRAI's Marketing and Growth Strategy

HouseRaising intends to expand operations nationally by opening new regions and strategically acquiring existing homebuilders who recognize the benefits of HRI’s proprietary turnkey management solution, System C (see System C below), and being affiliated with a national organization.

National Zone Development 
HRI’s long-term plans envision developing 37 zones or regions nationwide, over the next five years.  HRI structures the size of its regions so that demographically it needs less than 1% of the annual issued permits for new homes in each region.  At 50 new home projects and 50 renovations per region per year, the Company believes this is an attainable goal.  Sales prices of design/build projects average $450,000 and renovation projects average $100,000.  HRI’s goal is that each region will sell $22 million in homes and $5 million in renovation projects annually.  HRI’s goals for 2005 include rolling out System C and developing Zone 1 in the Southeastern U.S., where the Company is headquartered in Charlotte, N.C.

To help with the recent hurricane devastation, HouseRaising recently created Zone 2 in the hard-hit Gulf Coast area and will be opening its first offices in Biloxi and Gulfport, Mississippi and Slidell, Louisiana.  The Slidell office will also serve the Covington area.  HouseRaising expects to contract the building of 75 homes, which will add approximately $30 million to its 2006 year-end projections.  Additionally, the Company is currently recruiting and training support personnel and expects to have the necessary staff in place to handle these projects.  It has also obtained commitments from Lowe’s, 84 Lumber and other strategic partners to furnish materials and labor for the Gulf Coast Zone projects, which will expedite the scheduling and building process.

Acquisitions
HRI seeks to acquire builders who typically construct two to four upscale custom homes per year.  In January 2005, HRI signed agreements to acquire two prominent homebuilding companies with projects in North and South Carolina.  In April 2005, it signed a binding agreement to acquire Integrity Contractors, Inc., an award-winning custom homebuilder in Pensacola, Florida, averaging $3 million in annual revenues. This acquisition greatly expands HRI’s builder and vendor relationships in the region and includes proprietary estimating and pricing software to be incorporated into HRI’s System C.

Strategic Partners
HRI has a strategic partnership with CitiMortgage, a member of Citigroup specializing in nationwide lending of residential mortgages.  CitiMortgage has designed an extensive suite of mortgage and construction loan financing exclusively for clients of HouseRaising.

HouseRaising currently offers memberships to custom homebuilders that provide their singular enterprises with the collective strength of an experienced national builder.  Each member not only receives the substantial System C benefits but also insurance for their projects at a remarkably affordable rate.

Member builders will also tap into HouseRaising's buying power with national vendors like CitiMortgage, Lowe's and others integral to a successful project.  With over 250,000 builders nationwide, this is a lucrative market for HouseRaising.

The system’s five components are:

• Price and Design module: Accurately prices the unique home project from preliminary design documents, before architectural plans are produced.

• Six Management Platforms: Functioning nationally, HRI’s management platforms consist of in-house experts who produce accurate prices for turnkey projects, develop sales contracts, prepare specifications and architectural designs, engineering drawings, material take-offs, budgets and financing, managing the construction project from A to Z.

• National Construction Support Division (NCSD): The NCSD functions as a purchasing center for all national vendor relationships and provides behind-the-scenes support for all HouseRaising managed projects.  NCSD professionals and engineers provide working drawings for projects created by architects operating in Zone offices throughout the country.  NCSD estimators reduce house plans to accurate building budgets and material lists. On behalf of builders and homebuyers nationwide, NCSD manages cash flow on all HRI projects, coordinates draws and payments for vendors, and posts online daily progress of each project.

• Zone Design Center Operations: Zone Design Centers operate as home offices for builders and vendors to sell, design, build and finance up to 640 quality custom homes a year. Zone operations comprise HouseRaising platform managers, 250 affiliated builders and 56 additional parties needed to complete a design/build project.  Zone centers display all specifications, building materials and full-scale displays of key items available to be installed in the unique homes, thereby establishing quality and pricing standards and eliminating misunderstandings for buyers, builders and vendors alike.

• System C’s Core Triangle: Custom homebuilders are creative individuals; custom homebuyers are visionaries hoping to build a dream house; vendors are constructive individuals who operate businesses with less emotional content than buyers and builders. Addressing the needs of creative, visionary and constructive individuals, the Core Triangle identifies personnel whose traits are likely to increase quality and production at each step of the project.

Investment Considerations

• Patent-pending management system provides “one-stop shopping” for custom homebuyers and homebuilders

• Highly experienced management team and board

• Building a strong presence in the storm-ravaged Gulf-Coast region with the opening its first offices in Biloxi and Gulfport, Mississippi and Slidell, Louisiana already underway.

• Company is advancing national business development ahead of schedule through Strategic Partnership with CitiMortgage and pending acquisition of Florida-based Integrity Contractors

• Addresses market realistically valued at $2.25 billion generating annual cash flow of approximately $90 million

• In first quarter of 2005, Company obtained new contracts totaling more than $2.4 million in sales that are projected to be completed within an average of 9 months

• Company’s unique national business strategy and its turn-key solution for one-of-a-kind residences have no direct competitors in the custom homebuilding industry

Recent News From HouseRaising

Press Release  - Tuesday November 29, 2:28 pm ET 

To read the entire release and disclaimer, the link is HERE

Press Release  - Tuesday November 29, 10:30 am ET 

To read the entire release and disclaimer, the link is HERE

Press Release  - Friday November 11, 8:00 am ET 

To read the entire release and disclaimer, the link is HERE

Press Release  - Thursday November 3, 8:00 am ET

To read the entire release and disclaimer, the link is HERE
 

The HRAI Management Team and Directors

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Greg Wessling, Chairman and Chief Executive Officer
Mr. Wessling was formerly a member of the executive management team that transformed Lowe's Companies, Inc. from a small regional lumber and building supply retailer into a nationwide chain of home products and improvement centers with 1,100 stores in 48 states. During his 33-year tenure at Lowes, the company was listed on the New York Stock Exchange and achieved the prestigious designation of Fortune 50 status.  Mr. Wessling is highly regarded in the building and home improvement industries for his decisive management skills and expertise in strategic planning, corporate development and marketing on the national level.

Robert V. McLemore, Founder, Director and President
Mr. McLemore brings nearly 40 years of experience managing regional custom homebuilding operations to HouseRaising and its affiliated companies. For many years, he served as director for two Charlotte banks, trustee for the area’s leading private school and was a national director for the American Morgan Horse Association. The experiences gained from four decades of selling, designing and building some 2,000 custom homes are now being developed into a computerized management system that has become the HouseRaising Franchise. Mr. McLemore is currently developing the HouseRaising Franchise into a patented business methodology and national support operation capable of managing design/build and renovation projects in multiple regions around the country.

Richard A. von Gnechten, Chief Financial Officer
Mr. von Gnechten was formerly Financial VP and CFO for Hawaiian Electric Company, Inc. (NYSE:HE), where he was responsible for all aspects of the Company's financial management, including accounting, finance, treasury, risk management, investor relations, information technology and other related matters. Under his leadership, the Company maintained a superior credit rating, despite having to confront difficult circumstances that were prevalent within the energy market.  Mr. von Gnechten received an MBA in Finance and Accounting from Dartmouth's Tuck School of Business, and attended Stanford University's Graduate School of Business Financial Management Program.

Grant S. Neerings, Director, Chief Technology Officer, President-HouseRaisingAcademy
Mr. Neerings has a long and successful career in training, knowledge management and technology fields. He was one of the original founders of Egghead University (currently doing business as Catapult, Inc. an IBM Company) and designed the Performance-Based Training methodology used in Egghead University training. He also led the professional services team for Primus Knowledge Solutions in deploying knowledge management systems for large Fortune 500 high-tech companies such as Intel, 3Com, Nortel, and 3M. Prior to founding LearnBytes, he served as the Vice President of IT for Muzak and oversaw the digitization effort of over 150,000 music CDs.  He has an MA in Training and Development from Brigham Young University and a BA in Philosophy from the University of Utah.

Daniel S. Fogel, Director
Dr. Fogel is currently the Dean of Charlotte Programs and Executive Professor of Strategy at the renowned Wake Forest University, Babcock Graduate School of Management. In previous positions he was Dean of the International Management Center, Budapest, Hungary; Dean for the Czech Management Center in Prague, Czech Republic, and Associate Dean at the University of Pittsburgh and Tulane University. 

Kristy M. Carriker, Co-Founder, Director and Senior Vice President
Ms. Carriker is a Co-Founder of HouseRaising and has served since 1999. She is responsible for all of HouseRaising’s Builder Service and Support activities that include project cost budgeting, new home customer financing, accounting and administrative services. 

Honorable Robert M. Burroughs, Director and VP Public Relations
"Judge" Burroughs has been a Vice President since HouseRaising was organized in 1999. Judge Burroughs directs HouseRaising’s public relations efforts throughout the Carolinas and promotes HouseRaising as a quality product. He also assists HouseRaising by consulting on various legal matters pertaining to contracts HouseRaising enters with its Franchisees. Prior to joining HouseRaising, Judge Burroughs was for many years a Senior Judge for the North Carolina Superior Court. 

James O’Connor, Director
Mr. O’Connor is a Private Investor residing in Palm Springs, CA who joined HouseRaising’s Board of Directors at its inception in 1999. He brings decades of corporate management experience to HouseRaising, and has organized independent firms that he subsequently sold to public companies.
 

Financial Highlights For HouseRaising

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