EmerGeo Solutions Worldwide Inc. (EMG-TSXV)

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January 16, 2009 Issue

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With Their Emergency Management Technology, EmerGeo Is Helping Governments And Organizations On The Frontlines Prepare For And Cope With Natural Disasters And Acts Of Terrorism

Company Profile:

EmerGeo Solutions (TSX VENTURE:EMG)(FRANKFURT:EMI.F) provides fully integrated situation awareness technology, training and services to help Government and Industry manage risk in Emergency Management, Environment Health and Safety, and Security. EmerGeo is a “disaster tested” GIS mapping-based software that provides a reliable, world-class, open standards based situational awareness solution. Our software, training and professional services have proven to be effective in helping government and industry around the world to mitigate against, prepare for, respond to and recover from emergencies, natural disasters, acts of terrorism and major events.

Mike Morrow, President and CEO

Mike brings over 19 years of experience in the design, implementation and marketing of emergency management and major event security planning systems in government and industry. He has managed more than 40 major crisis management systems development and implementation projects around the world, including security planning and response systems for the 2002 G8 Summit Meeting in Kananaskis and emergency management information system implementations for Western Australia, Washington State, the B.C. Provincial Emergency Program, the Abu Dhabi National Oil Company, Sempra Energy and dozens of local government jurisdictions.

Mike is a "hands-on" emergency management practitioner who has supported many emergency exercises and has worked alongside emergency responders during several major emergencies and special events in Canada, the USA and Australia. Mike has helped government and industry to effectively implement incident management systems, leveraging technology whenever practical.

Mike is an active member of several emergency management associations and a contributor to emergency management industry groups. Mike holds a Bachelor of Commerce degree from the University of Calgary (Alberta) and gained his technical training from IBM Canada as a Systems Engineer and Marketing Representative for some of IBM’s large oil and gas customers.

Emergency Management

EmerGeo Solutions Worldwide Inc.
1166 Alberni Street, Suite 1001
Vancouver, BC CA V6E 3Z3
Phone: 604.681.0989

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – January 16, 2009

Mr. Morrow, you have a long background in emergency management; why are you with EmerGeo today?
Mr. Morrow: “I saw an opportunity almost twenty years ago to do a better job of applying technology to help protect people, property and the environment during any kind of emergency or disaster situation. I have been developing and implementing emergency planning and response systems since 1989 and EmerGeo Solutions Inc. was started roughly five years ago to focus in on developing some of the latest GIS mapping technologies to help emergency managers.”


CEOCFO: What is the company all about?
Mr. Morrow: “We are primarily a technology company and have developed an crisis information management software application called EmerGeo, which is used primarily by responders and planners within government and industry organizations that have to keep track of what is happening, or could happen, in any kind of natural disaster major event. What we offer is a mapping based technology that gives decision-makers at all levels a real-time picture of what is happening during an event and, importantly, a workflow publishing engine that ensures the right information is sent to the right people who need to know - who are making the life-saving decisions.”


CEOCFO: Would you give us a few examples of who is using your technology now?

Mr. Morrow: “One of our long term clients is the City of Vancouver. Vancouver will be hosting the 2010 Olympic Games, so our software will be used in the City’s Emergency Operation Centre. It has been used for several years for not just emergency response, but also training and disaster simulation exercises. That is an example of one of the many municipalities using EmerGeo. We have a very large gas and electric utilities Sempra Energy, based in Southern California that just recently deployed the software, and as you know there are fires happening in Southern California as we speak. It is being deployed to help track incidents and resources and in the new year will be integrated with the company’s alert notification system to enable text and voice notification messages to staff, agencies or the public. We have a variety of government and industry clients around the world using the software and our emergency management, HSE, eLearning, and security consulting services to ensure customer’s have effective plans in place and they are exercised and tested.”


CEOCFO: You have a lot of international clients as well!

Mr. Morrow: “Yes that is right. We have been doing work with the Abu Dhabi National Oil Company in the United Arab Emirates. We actually have several large opportunities in the UAE and we are currently setting up an office and operation in Abu Dhabi. We have been contacted by one of the authorities that wishes to remain unnamed to help them develop their whole emergency management program in the country and to help them design their emergency centers, etc.”


CEOCFO: What is the competitive landscape for you, and why are people coming to EmerGeo?

Mr. Morrow: “The competitive landscape is interesting because no one is doing quite what we are doing. However, we have a lot of indirect competitors, who are often also our partners. For example, in terms of mapping technology there is GIS Technology (Geographic Information System) technology from ESRI, Intergraph Corporation, AutoDesk, Map Info, etc. We don’t compete with those folks, in fact they are our partners and we leverage their technology to deliver mapping data to our application. There are many alert notification system providers; they have some basic mapping technology that allows you to draw a circle on a map and send out a voice and text notification to residents and businesses that may have to evacuate, for example. What we do is interface with those technologies and actually leverage their notification technology through our EmerGeo software.  EmerGeo is really an integration platform that has a very unique crisis management workflow publishing capability that we have not seen in any other products. It is important to realize that in every disaster, from 9/11, Katrina, and these California fires that are going on now plus other events around the world, the number-one thing that fails is communications. There are two aspects to communication failure that we address: getting the right information to the right people and doing it in a timely (real-time) manner. We understand emergency management well enough to know what pieces of information need to go to which individuals who are making these kinds of life-saving and property protection decisions.”


CEOCFO: What sets EmerGeo apart? Is it the experience, technology or ability to implement?

Mr. Morrow: “It is really all of the above. The key technology capability lies in EmerGeo’s workflow engine that is built in - it is all based on first-hand experience in the industry. Several of our staff, and myself have been first responders. We have been involved in supporting agencies that are responding to these disasters on the front lines and we have first-hand experience of what is required. Our business is really about applying the lessons learned and that knowledge to the EmerGeo engine and helping customers implement emergency, EH&S, and security plans that work.”


CEOCFO: How do you reach your potential customer?

Mr. Morrow: “In our industry emergency management is a very small community. It is a very large market, but when I say small community, people talk. If something goes wrong, word gets out very quickly. It is all about trust, reputation and know-how. Most of our selling is being done at trade shows. It is face-to-face; it is through supporting exercises that we help customers run and through successful use the software for emergency response and planning. We do very little advertising because the word-of-mouth has been helping us gain market penetration.”


CEOCFO: What is your revenue model?

Mr. Morrow: “There are several components to our revenue model and the first one obviously is we sell software licenses. A customer buys the software, its perpetual license and they buy various configurations that vary in price, so the first component is the upfront fee for the software. There is an ongoing annual support maintenance contract that a customer can opt into and that provides us with our annuity, which ranges from 25-35% of the software cost per annum. Then we provide a full suite of consulting and technical services for clients to ensure that the technology is implemented properly and maintained. In involves providing training and know-how, building their emergency plans and adapting the software to the plans, and so on. Therefore, there is a services revenue stream as well.”


CEOCFO: Do you find that many of your clients know what they need, or do they come to you for guidance?

Mr. Morrow: “Many people know that they have a problem and many are doing things the old way which is paper, pen, white boards, paper maps. They recognize they can’t manage larger or complex emergencies this way. They realize that communications often fails. They are not able to communicate what is going to other people that may not be right next to them. People have recognized that the common problem is a communications and coordination problem between multiple response agencies - this is the problem we are addressing. What a lot of people don’t fully understand is how they can fix those problems and that is part of what we do - we start by learning more about their business and goals, their concept of operations, and then educate and apply best practices in everything we do. It is important also that we have software that adapts to the way that the customer does business as opposed to the other way around. There are other software applications out there that force the customer to adapt how they do business to the way the software works and that model has failed.”


CEOCFO: What is the financial picture like at EmerGeo today?

Mr. Morrow: “Very good. We have recently gone public on the Toronto Stock Exchange to raise some additional capital. We have basically been doubling our revenues year-over-year. We have a very solid client base and our annual support maintenance revenue is building cumulatively. We have done over $1 million in sales last year and we expect to at least double that this year. There are some very large multi-million dollar contracts that we submitted proposals on, especially in the Middle East. I can’t discuss those in detail other than to say that winning any one of those will certainly take us to a new stage in our growth.”


CEOCFO: Do you think the current economic scenario will make people more reluctant to purchase in the emergency management area?

Mr. Morrow: “I have not seen that. I talk to a lot of emergency management directors and their budgets are not being cut. I think people and government recognize, especially these days the importance of protecting people from the real threats of terrorism and from the destruction caused by natural disasters. It is only getting more frequent, more costly, and disasters are really in the public eye, so there is a lot of pressure on these organizations to do things better. Therefore, the answer is no; we are very much recession resistant. Certainly, there is going to be some IT budgets that are affected, but we are a very specialized niche application and we expect that the economic turmoil has the potential to generate more public safety problems around the globe.”


CEOCFO: In closing, why should potential investors be interested, and what might people miss about EmerGeo that really should be front and center?

Mr. Morrow: “When I talk to investors, one of the keys, especially for long-term investors, is they want to invest in a very solid growth company with proven products and services. EmerGeo offers that. Disasters are getting more expensive and frequent, the terrorism threats are not going away, and there is more spending planned by our sector. We are certainly well positioned for rapid growth. Another important consideration for investors is that what we do is help people and protect property and the environment - everyone in our company is passionate about our industry and I think investors are looking for solid investments that make our world a better and safer place to live. An investment in EmerGeo is an investment in helping those fire, police and other responders on the frontlines that save lives.”


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“What we offer is a mapping based technology that gives decision-makers at all levels a real-time picture of what is happening during an event and, importantly, a workflow publishing engine that ensures the right information is sent to the right people who need to know - who are making the life-saving decisions.” - Michael Morrow

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