eMerge Interactive: Sustainability and Success Jacob AcMoody Michael Gunderson Whitney Oliver Peake 2005 American Agricultural Economics Association Graduate Student Case Study Competition

eMerge Interactive a technology company serving the U.S. beef production industry

Service Line and Product Line CattleLOG™ Individual animal data collection VerifEYE™ Improving food safety with cutting-edge products

CattleLOG™ Weaknesses  Dependent  Tarnished  Riveted Opportunities  Branded beef  Traceability  F2P value chain Threats  Commodity competition  Government delays  Fragmented industry Strengths  Aligned  Reliable  Approved

CattleLOG™ Strengths  Aligned  Reliable  Approved Opportunities  Branded beef  Traceability  F2P value chain Threats  Commodity competition  Government delays  Fragmented industry Weaknesses  Dependent  Tarnished  Riveted

CattleLOG™ Strengths  Aligned  Reliable  Approved Weaknesses  Dependent  Tarnished  Riveted Threats  Commodity competition  Government delays  Fragmented industry Opportunities  Branded beef  Traceability  F2P value chain

CattleLOG™ Strengths  Aligned  Reliable  Approved Weaknesses  Dependent  Tarnished  Riveted Opportunities  Branded beef  Traceability  F2P value chain Threats  Commodity competition  Government delays  Fragmented industry

VerifEYE™ Weaknesses  Unknown  Limited  Constrained Opportunities  Alliances  Hand hygiene  International markets Threats  Benefit difficult to quantify  High costs  Export slowdown Strengths  Innovative  Exclusive  Efficient  Committed

Strengths  Innovative  Exclusive  Efficient  Committed Opportunities  Alliances  Hand hygiene  International markets Threats  Benefit difficult to quantify  High costs  Export slowdown Weaknesses  Unknown  Limited  Constrained VerifEYE™

Strengths  Innovative  Exclusive  Efficient  Committed Weaknesses  Unknown  Limited  Constrained Threats  Benefit difficult to quantify  High costs  Export slowdown Opportunities  Alliances  Hand hygiene  International markets VerifEYE™

Strengths  Innovative  Exclusive  Efficient  Committed Weaknesses  Unknown  Limited  Constrained Opportunities  Alliances  Hand hygiene  International markets Threats  Benefit difficult to quantify  High costs  Export slowdown VerifEYE™

Quarterly Financials

Strategic Direction eMerge Interactive: a technology company serving the U.S. beef production industry

Strategic Direction eMerge Interactive: a technology creation company serving the U.S. meat processing industry

Who Is The Target Market?

Beef Processing Industry

Value of Brand Protection  Hudson Foods, Inc.  25 million pounds of beef recalled

Values of Food Safety  Marginal WTP for Traceability = 8%  Marginal WTP for Food Safety = 21% “Individuals in the US and Canada are willing to pay even more for food safety guarantees than for traceability alone”

Implementation establishing sustainability, aiming for long term success

Sell CattleLOG™  No sustainable competitive advantage  Existing customer value

Product Development eMerge Present and Future New Current Market Development Penetration Unrelated Diversification CurrentNew Products Market Expansion Grid Customers or Markets

Sales Growth of VerifEYE™ $200,000 for capital lease $450,000/year for three years

Pro Forma Financials millions of revenues millions of operating margin

Hand Held VerifEYE™

Sustainable Competitive Advantage  Technology development  Early contaminant detection systems  Growth in technology budget

eMerge Interactive  Refocusing for sustainability  Using experience to deliver reliable food safety solutions for processors  Enhancing shareholder value by innovating detection technology

Questions?