May 5, 2000

eMerge Interactive, Inc. (NASDAQ: EMRG), has acquired health-certification leader Jordan Cattle Auction of San Saba, as well as the sales and support infrastructure of Eastern Livestock Company, Louisville, KY, the nation’s largest cattle marketing operation. The acquisitions propel eMerge towards what company officials term its "Value Chain Integration" strategy, with the stated goal of improving beef quality, yields, safety and profitability industry-wide.

Jordan Cattle sells approximately 180,000 head of cattle per year through regular and premium sales in San Saba, Brownwood, and Mason. Eastern Livestock markets approximately 2 million head per year to stocker operators and feeders nationwide.

By bringing these resources into the eMerge fold, the company has fortified its infrastructure with facilities and livestock-assembly points to increase the number of cattle available through high-efficiency, Internet-enabled marketing channels, according to eMerge chief executive officer Charles Abraham.

In addition, Abraham said Jordan Cattle’s proven health-certification capabilities, which document cattle-management practices from the day of weaning and electronically track individual animals throughout the supply chain, strengthen eMerge’s ability to promote value-added, process-verified beef and to enhance profits for beef producers large and small.

eMerge, a business-to-business value-chain integrator, operates CattleinfoNet, an Internet-enabled information-management, auction and e-commerce network designed to improve beef-industry performance and profitability. Abraham said these acquisitions position the company to dramatically increase the nation’s supply of consistently high-quality, health-verified cattle—and to transform this once strictly regional purchasing forum into a truly nationwide marketplace.

Unlike traditional market-makers that simply connect buyers and sellers, eMerge will use these acquisitions to promote rapid scaling of its continuing Value Chain Integration strategy for the U.S. beef industry, Abraham said—a strategy that he said adds new value to the nation’s beef supply by enhancing fundamental management practices.

"Our goal is to create a new beef economy by positively impacting the production process through eMerge’s efficient e-marketplace, powerful information-management infrastructure, and value-enhancing technologies," he said. "These acquisitions represent major progress in our drive to achieve this goal."

eMerge already has many components of its Value Chain Integration process in place, Abraham said, including the industry’s largest private historical livestock database, robust information systems, a rapidly growing e-marketplace, and technologies that enable the industry to more effectively add value to its product. Combining these existing resources with the pre-eminent players in their respective disciplines builds on that foundation, he pointed out.

"Eastern is a well-respected organization with both large-volume management expertise and a vast, industry-wide marketing network already in place," Abraham said. "We will overlay our CattleinfoNet’s e-commerce platform, information network and technologies on this organization, optimizing our combined performance to continue creating the largest virtual marketplace in the American beef business."

Jordan Cattle adds another critical dimension to the Value Chain Integration process, he said.

"Jordan was one of the first to successfully commercialize the concept of cattle-health certification. Since then, the firm has demonstrated that a thoroughly documented quality process adds value and enhances margins. Ranchers are already earning premiums averaging $60 a head over market price for their quality-certified cattle—value that will continue to build at the feedyard level, as they realize the benefits of lower costs and higher-performing cattle.

"By merging Jordan’s premium-sale model with Eastern’s large-volume capabilities and our own information infrastructure and value-enhancing technologies, we’re not only dramatically increasing our market reach, we’ll also be helping the industry, on a national scale, achieve the enhanced margins attainable only through beef certification and branding."

Executives at both Eastern and Jordan share Abraham’s enthusiasm about the acquisitions.

"Our family has been in the cattle business for more than 100 years," said Eastern Livestock president Tommy Gibson, who will continue operating Eastern’s cattle-pasturing and feeding business independently. "Now, by combining eMerge’s immense resources and advanced technologies with our existing system, we hope to take both our customers and the entire industry to new levels of quality and profitability. And that’s going to make all of us even more successful."

Jordan Cattle vice president and general manager Ken Jordan agreed. "Although our health-certification program has been tremendously successful for participating ranchers, our market reach has been limited by the realities of geography. But eMerge is tearing down those barriers—which means that our ability to enhance producers’ margins has suddenly become national in scope."

eMerge Interactive is uniquely qualified to effect these changes, he added. "eMerge combines in-depth expertise in the cattle business with unique tools. Its highly scalable business model will make it possible to apply the Jordan certification model to a rapidly growing network of cattle businesses across the nation—and ultimately, to affect the national beef-manufacturing process so other participants can realize the margin enhancements we’ve seen."

Over the years, both Jordan and Gibson have played key roles in the evolution of the beef industry, Abraham pointed out. "The changes we are instituting wouldn’t have evolved so quickly without their pioneering efforts," he said.