Fulton Breen President CEO My Background Founded XS

Fulton Breen President & CEO

My Background Founded XS, Inc. Survived Budget cycles Finished Statistics Ether Dot com crash Marketing, J. Huber Started WEMBA Program Jan. 1996 Timeline Breakeven! Left Rhone Poulenc

Overview The US ag market and key trends Who we are; what we do Building liquidity

The US Agricultural Market and Key Trends

US Agriculture 101: Grower Concentration The 80/20 rule applies in agricultural production Target XS customers 18% 60% 950 million acres 87% 2 million U. S. farms Source: USDA, 2000 $209 billion outputs

US Agriculture 101: Inputs and Outputs Lower prices are driving operating margins to less than 10% Outputs=$209 b $112 b crops $97 b livestock Source: USDA, 2000 Inputs=$184 b $6 -7 b $9 -10 b $11 b $15 b Seed Chemicals Fertilizer Equipment Livestock $14 b Feed $25 b Other operating exp. and capital $102 -104 b

Industry Trends Require Efficient Markets Deregulation Globalization Consolidation Technology Source: USDA, July 2001

Agricultural inputs move through traditional, complex channels… $B Information Inter-Distributor Trading = $0. 3 B $12 Inter-Dealer Trading = $0. 3 B $10 $8 $6 $4 $7. 1 1. 0 To Dealers 6. 1 To Dist Invoice Margin 0. 8 Program Margin 0. 9 Manufacturers 4. 6 To Growers $5. 4 Invoice Margin 0. 5 Program Margin 0. 7 COGS 6. 1 COGS 1. 0 3. 2 To Dealers $2 $0 $7. 8 $10. 0 Distributors COGS 3. 2 5. 4 To Growers Dealers Source: Nu. Ventures Consultants, Industry Interviews, XS Analysis 5. 4 Growers

Agriculture Is “Wired” History of Technology Adoption and Innovation Catalog purchases Satellite Communications, cell phones, Rural Telephone Network Chicago Board of Trade, New York Cotton Exchange GPS systems Roundup® Ready Soybeans All of which is why… >80% of Farmers with revenue over $500, 000 have Internet access Source: US Ag Census

“Power” Is Shifting Towards Buyers • Deregulation of markets • Increased regulation of products • Government subsidies Sellers • >85% post patent • Generics • Biotech • Consolidation • Costs (inv, overhead) • Internet marketing External Forces Industry Competition Buyers • Globalization • Internet procurement Substitution • Internet (channel) • Generics (manufacturers) • Biotech (products)

Farms Purchasing Inputs Over The Internet Percent of growers buying 8 to 10 (6) 7 to 8 (6) 6 to 7 (6) 5 to 6 (5) 1 to 5 (11) Source: USDA, July 2001 1

Who We Are, What We Do

XS, Inc. Profile Public exchange offering security, full service fulfillment, and prec customer relationship management (XSAG. com) Private exchanges (Nterline) Targeting highly fragmented, $50 billion, U. S. agricultural inputs market ag chemicals seeds vet supplies Turf equipment parts animal nutrition PCO Launchedag chemicalsin 1999, expanded into seed, vet, parts, PCO and turf Highly scalable, comprehensive, and proprietary system >65, 000 registered users

Targeted U. S. Agricultural Inputs Market Chemicals $9 -10 b Seeds $6 -7 b Fertilizer $11 b Vet Supplies $6 b Equipment Parts $15 b TOTAL MARKET OPPORTUNITY $47 -50 b Conservative 2 X multiplier $100 b Source: USDA, Industry Reports, Industry Interviews

Building Liquidity

How Hard Can This Be To Sell? Example Buyer Value Proposition: Free service No risk Save up to 30% or more $185. 51 Dealer $34. 35 Distributor $14. 87 Manufacturer 24% Savings $140. 41 $136. 29 Traditional NYP Freight $1. 39 XS $2. 73 Manufacturer

Best in Class. Merchandizing. Flexibility for Sellers LEVER DEGREES OF FREEDOM FOR EACH LISTING Venue Your Site Affiliated Site(s) Pricing Fixed Pricing Dynamic Pricing Contract Pricing Sell to Anyone Sell via or to Channel None Single Event Promo Customer Specific Offers Rewards Program Product Info Straight Listings Linked from Advertising Product Single Product Linked from Editorial Content Bundled Products Cash Sales Third Party Credit Seller Credit No Restriction Broadly Defined County Level Detail Seller ID Identified Anonymous Logistics Seller Managed Nterline Managed Customer Promotions Credit Geography Products and Promotions Real time quotes or “free” delivery

Trade Six Components of E-commerce Trust Register, Transact (trial), • Icons, Seals of Approval Confirm • Brand • Navigation Consider, Validate, Assess • Fulfillment • Presentation Browse, Search, Compare • Technology Traffic Degree of Adoption Maintaining the Relationship • Feature Enhancement • Flawless Execution • Customer Intimacy/One to One Marketing Trust Demand Starts The Ball Rolling Use Habitually, Transact Fully Controllable Activities • 100+ PR articles • Over 500 Radio interviews • Print ads, radio ads, DTN screens, mailings • TV interviews • Trade Shows • Outbound call center Hear about site Time

How Do You Build Trust (When Your Sellers Are Anonymous)? Leverage “Trust Brokers” Farm credit Agricultural education Teleconference testimonials Buying Groups; Buying Group Premiums Build relationships Phone, E-mail, letters Tradeshows, personal visits Educate to clarify value proposition PR Speaking engagements Survey to refine message Over deliver on service, response time, complaint handling

Identify and Correct Misconceptions Data required for an ACH transfer is easily collected using a simple graphic

Target Segments To Drive Behavior Beta Testers, special prizes Personal Letter, premium $1 Auction, Group Buying Price Visibility Call back E-mail, Word of Mouth, PR List; No sale Bid; No purch. Fully register Pre-register Site visit The Universe Adoption Haggle, Market Maker Features 1 st Trade Information Repeat

Adoption Will Begin With Those Who Have The Most To Gain Trading Participants to Date 80% 100% 90% % of Total Sales 80% 54% 70% 61% 60% To Grower 50% To Dealer 40% 20% 30% 20% 10% 0% 3% 17% 5% 5% 7% 6% To Distributor 26% 13% Manufacturer Distributor Sellers Dealer Total

XSAg. com: Gaining Real Traction… 1999 2001 Ju l Au g Se p ct N ov D ec Ja n Fe b M ar Ap r M ay Ju n 2002 O • • • 2000 2001 vs. 2000 Trade value: ~2 x Net revenue: ~ 4 x Listings: >$1. 5 Billion Members: >65, 000 Avg. tradeincr: >50% Source: XS metrics

What We’ve Learned In 4 Years… Demand drives transactions (bring customers; the shelves will fill themselves) Traditional awareness building activities don’t generate demand Big companies respond to fear, not opportunity Transparency, anonymity, technology have been the drivers of success, but… …You can’t build a relationship with ‘anonymity’ Learn how to ‘monetize’ existing relationships Execution is everything

Questions? Fulton Breen: fbreen@xsinc. com