“We bring it all together” “Anatomy of an Equity Capital Raise” Jim Waldrop President and CEO HomeSphere, Inc. “Ask not what your investor do for you, but what you can do for your investor”

University of Colorado 2/14/ TIMELINE Began solicitation of firms 9/05 Began drafting private placement memorandum (PPM) Received 1 st term sheet Board approved PPM 11/051/065/067/06 Decision 9/06 Received 2 nd term sheet

3 OVERVIEW Capital raise goals HomeSphere business overview Software capital market overview Homebuilding market overview Offers received Ultimate decision University of Colorado 2/14/2007

4 CAPITAL RAISE GOALS University of Colorado 2/14/2007 Raise $6 million preferred equity Partner with strong equity partner: –Specialize in similar industry segment –Seasoned business operators, not just finance Minimize impact on current shareholder rights Mitigate shareholder dilution

CAPITAL RAISE GOALS Source of funds: –Venture capital market –Private equity market Use of funds: –Enhance our brand and marketing capability –Expand our sales force –Refresh our current Web functionality –Develop new revenue-based Web services University of Colorado 2/14/

HOMESPHERE BUSINESS OVERVIEW University of Colorado 2/14/

BUSINESS MODEL OVERVIEW Provide technology-leveraged supply chain services to the homebuilding industry –Material rebate management –Business intelligence –Sales force collaboration –Collaborative buying Use Software as a Service (SaaS) model University of Colorado 2/14/

University of Colorado 2/14/ BUSINESS SERVICES OVERVIEW Material usage Cost savings rebates Builder SUPPLY CHANNEL Home BuyerManufacturer Dealer Distributor Builder Builder’s Desktop ® Subcontractor GROUP BUYING SALES FORCE COLLABORATION

9 SOFTWARE as a SERVICE MODEL University of Colorado 2/14/2007

10 SaaS VERSUS HOMESPHERE MODEL University of Colorado 2/14/2007 SaaSHomeSphere Conclusion: Company should be valued higher

SOFTWARE CAPITAL MARKET OVERVIEW University of Colorado 2/14/

12 VALUATION METRICS INCLUDES LICENSED and SOFTWARE as a SERVICE MODELS University of Colorado 2/14/2007

13 SOFTWARE MARKET TRENDS University of Colorado 2/14/2007

HOMEBUILDING MARKET OVERVIEW University of Colorado 2/14/

15 MEDIA FEEDING MARKET VIEWS University of Colorado 2/14/2007

16 IMPACT ON BUILDER VALUATIONS University of Colorado 2/14/2007

17 IMPACT ON BUILDER VALUATIONS University of Colorado 2/14/2007

18 Source: US Census Bureau HOUSING OUTLOOK STILL SOLID FORECAST University of Colorado 2/14/2007

19 NET MARKET EFFECTS Homebuilder valuations declining –Near historic bottoms – “guilt by association” –Upside in front Software valuations near bottom Investors focus on risk protection –Not just valuation offers –But also terms and conditions Our future view strong –Market upside ahead –Valuations will increase University of Colorado 2/14/2007

OFFERS RECEIVED University of Colorado 2/14/

21 VALUATION METHODOLOGY Trailing 12 month revenues (TTM) $1,000 Times:Multiplier3x Equals:Company valuation$3,000 University of Colorado 2/14/2007

22 VALUATION METRICS INCLUDES LICENSED and SOFTWARE as a SERVICE MODELS HomeSphere’s Focus University of Colorado 2/14/2007

COMPARATIVE PUBLICS ANALYSIS University of Colorado 2/14/ Mean 5.5x Mean 4.4x

24 IMPACT ON COMPANY VALUATION SaaS UNIVERSE CRM/MKT SUBSETOFFERS RECEIVED ($Millions) MEAN 1 ST TERM SHEET 2 ND TERM SHEET Trailing 12 Month Rev $13.6 EV/Revenue 4.4x5.5x3.2x2.75x Public Valuation $60.0$75.0$43.7$37.4 Private Adjustment 75% Adjusted valuation $45.2$56.3$32.6$28.0 Comparable Valuations 62%50%86% University of Colorado 2/14/2007

25 IMPACT ON COMPANY OWNERSHIP SaaS UNIVERSE CRM/MKT SUBSET SECOND TERM SHEET ($Millions) MEAN VALUATION Pre-money valuation$45.2$56.3$28.0 Investment$6.0 Post money valuation$51.2$62.3$34.0 Investor’s ownership11.7%9.6%17.6% Conclusion: Company undervalued by market University of Colorado 2/14/2007

SHAREHOLDER VOTING PRE-MONEYPOST-MONEY COMMON: LEAD INVESTOR15.7%12.6% FOUNDER16.2%13.9% Total31.9%26.5% PREFERRED (LEAD): SERIES A13.8%11.1% SERIES C14.7%11.7% Total28.5%22.8% Total Lead & Founder60.4%49.3% SERIES D (NEW)17.6% University of Colorado 2/14/

DECISION?? University of Colorado 2/14/

28 CAPITAL RAISE CONCLUSION Stop capital raise –Market undervalues company –Investor fear of homebuilding industry –Re-visit investment opportunity later Sell other assets instead –Provided some capital to start plan –Eliminated dilution –Did not require finding desired capital partner University of Colorado 2/14/2007

Questions and discussion University of Colorado 2/14/