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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

Or

Commission File Number: 000-29037

eMerge Interactive, Inc.

(Exact name of registrant as specified in its charter)

10305 102nd Terrace

Sebastian, Florida 32958

(Address of principal executive offices)

(772) 581-9700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

Securities registered pursuant to Section 12 (g) of the Act:

Class A Common Stock, par value $0.008 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES  x  NO  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES  ¨  NO  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $69.6 million as of June 30, 2004 (the last day of the registrant’s most recently completed second quarter), based upon the closing sale price per share of the common stock as quoted on the NASDAQ SmallCap Market. For the purposes of determining this amount only, the Company has excluded shares of common stock held by directors, officers and stockholders with representatives on the board of directors whose ownership exceeds five percent of the common stock outstanding at June 30, 2004. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant.

The number of shares of the registrant’s Class A common stock, $0.008 par value, outstanding as of March 10, 2005 was 50,337,583.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of eMerge Interactive, Inc.’s definitive proxy statement for its 2005 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this Form 10-K Report are incorporated by reference into Part III of this Report.

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eMerge Interactive, Inc.

FORM 10-K ANNUAL REPORT

(For Fiscal Year Ended December 31, 2004)

TABLE OF CONTENTS

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PART I

ITEM 1.    BUSINESS

GENERAL

eMerge Interactive, Inc. (“eMerge,” “us,” “we,” “our” or the “Company”) is a technology company focusing on the agricultural, food service and healthcare industries. We are structured into two business segments, Food Safety Technologies (“FST”) and Animal Information Solutions (“AIS”).

FST’s patented VerifEYE^™ food safety technology is a unique machine vision technology that is designed to instantly detect microscopic levels of organic contamination, which can harbor deadly pathogens. The VerifEYE technology is available in several applications for the meat processing and food processing industries, and we are developing additional products for the food service, healthcare and childcare industries.

AIS provides comprehensive, data-driven solutions to the cattle industry to enable animal management for the livestock industry. Our products include CattleLog^™ data base and data collection tools and a variety of other data management software tools, which, when used in combination with multiple data reporting options, allow users to properly perform a large variety of animal tracking, management and performance improvement applications.

Our business is currently dependent on the beef industry. Recent factors, including an ongoing trade dispute between the U.S. and Japan and the termination of the cattle trade between the U.S. and Canada, have come together to create poor market conditions in key segments of the U.S. beef industry. The discovery, in December 2003, of Bovine Spongiform Encephalopathy (“BSE”) in the U.S., led to the suspension of approximately $3 billion of annual beef exports. This negatively impacted the financial results of U.S. packers in 2004 and their prospects for 2005. Furthermore, the BSE discovery initiated the closure of live-cattle trade between the U.S. and Canada, which also put a financial burden on meat packers who have had to pay increasingly elevated cattle prices. As the domestic cattle supply dwindled in late 2004, several major packers announced reduced production levels and plant closures, citing economic losses related to the limited cattle supply. The result of these developments has been a reduction in U.S. cattle supply and unfavorable prospects for some segments of the industry in 2005. Among other implications of these industry conditions is that key industry segments have reduced discretionary capital spending, which could have a material adverse effect on our prospects.

If we are unable to generate significantly higher sales from our products and services in 2005, we will need to pursue additional sources of liquidity, and we may consider alternative business strategies relating to the development, marketing and sales of our products and services from those described in this Form 10-K. However, no decisions have yet been reached on these strategies and there can be no assurance of our success if these alternative strategies are adopted. See “Factors Affecting Our Business, Financial Condition and Results of Operations.”

HISTORY

We were incorporated as a Delaware corporation in 1994 and consummated an initial public offering of common stock in February 2000.

During 2000 and 2001, we acquired thirteen cattle brokerage companies, which represented 10% of the cattle trading market in the U. S. These acquisitions increased our revenues to $1.2 billion in 2001, but required significant use of capital. We incurred a net loss of $92.4 million in 2001. Subsequently, in 2002, we determined that we would sell or close all the cattle operations. Accordingly, the assets of the operations to be sold were adjusted to their estimated fair value, which resulted in a non-cash asset impairment charge of $6.8 million for the year ended December 31, 2002. Both the write-down of these assets and the results of operations for these businesses are included in discontinued operations. The values of the intangible assets of the operations to be

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liquidated were also evaluated, and we determined that estimated future undiscounted cash flows expected to result from the use and eventual disposition of the assets were below the carrying value of the assets. We adjusted the carrying value of these assets to their estimated fair value of $0, resulting in a non-cash impairment loss of approximately $1.9 million, which is included in discontinued operations for the year ended December 31, 2002. The last of these operations was disposed of in January 2003.

Following the decision to exit the cattle brokerage businesses, we initiated a restructuring in an effort to reduce operating costs. We also implemented initiatives to reduce our cost structure and streamline our corporate operations to better position us to achieve profitability. As a result of these initiatives, we reduced our workforce several times, incurring $319,000 in severance and related employee costs and $84,000 in other closure, employee and professional costs for the year ended December 31, 2002. We also reviewed all of our intangible assets and adjusted their carrying values to estimated fair values, based on discounted cash flows, which resulted in non-cash asset impairment charges of $1.6 million included in continuing operations for the year ended December 31, 2002.

Concurrent with the reductions in workforce in 2002, we identified two technologies that we believe have significant market potential: food safety technology, through the application of florescent response technology for which we hold exclusive patent rights; and individual animal management, through the application of data base and data management tools in which we had made a significant investment. Subsequently, these two technologies have become our two main business segments.

On November 20, 2003, we issued 1,605,136 shares of our Class A common stock at $0.623 per share and warrants exercisable for 802,568 shares of our Class A common stock at an exercise price of $0.98 per share to The Biegert Family Trust for $1.0 million in cash. The warrants expire on November 21, 2008. These shares were subsequently registered with the SEC, effective January 12, 2004.

On January 23, 2004, we issued 2,333,333 shares of our Class A common stock at $3.00 per share, additional investment rights exercisable for 830,508 shares of our Class A common stock at an exercise price of $3.00 per share and warrants exercisable for 830,508 shares of our Class A common stock at an exercise price of $3.6875 per share to Mainfield Enterprises, Inc., Cranshire Capital L.P., Smithfield Fiduciary LLC and Omicron Master Trust for $7.0 million in cash. The additional investment rights expired unexercised on July 13, 2004. The warrants were repriced to have an exercise price of $1.40 per share in January 2005. As part of this transaction, we also issued warrants exercisable for 163,333 shares of our Class A common stock at an exercise price of $3.73 to the placement agent as consideration for providing financial and advisory services. These shares and the shares issuable upon exercise of the warrants and additional investment rights were subsequently registered with the SEC, effective April 16, 2004.

On December 2, 2004, we issued 2,500,000 shares of our Class A common stock at $1.60 per share, additional investment rights exercisable for 1,250,000 shares of our Class A common stock at an exercise price of $1.60 per share and warrants exercisable for 875,000 shares of our Class A common stock at an exercise price of $2.00 per share to Steelhead Investments Ltd., Cranshire Capital LP and Omicron Master Trust for $4.0 million in cash. As part of this transaction, we also issued warrants exercisable for 150,000 shares of our Class A common stock at an exercise price of $2.30 per share to the placement agent as consideration for providing financial and advisory services. These shares and the shares issuable upon exercise of the warrants and additional investment rights were subsequently registered with the SEC, effective January 6, 2005. The investment rights are exercisable any time prior to the 180^th trading day following the effectiveness of this registration statement.

On January 27, 2005, we issued 2,900,000 shares of our Class A common stock at $1.40 per share and warrants exercisable for 435,000 shares of our Class A common stock at an exercise price of $1.75 per share to Steelhead Investments Ltd., Cranshire Capital LP and Omicron Master Trust for $4.1 million in cash. We intend to file a registration statement for these shares and the shares issuable upon exercise of the warrants with the SEC in March 2005, following the filing of this Form 10-K.

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HOW WE OPERATE

We are in the process of positioning our company to be a market leader in the areas of food safety, traceability and assurance, as well as increasing our product offerings through continued research and development. Our primary products, however, are in early stage development and commercialization and market adoption is not yet proven.

In the future, our focus in the FST segment will be to gain industry-wide adoption of our current VerifEYE products the Solo^™ handheld scanning system and the Carcass Inspection System (“CIS”), as well as to complete the commercialization of HandScan^™, our hand hygiene system and other products using the VerifEYE technology. There are numerous beef processors in the U.S. who, we believe, would benefit from adoption of the Solo technology as an addition to their current food safety processes. With our limited staff, we are unable to adequately market Solo units to all of these beef processors. To enhance our ability to market the Solo units we have signed a distribution agreement with Safeline for the food processing and food retailer market throughout North, Central and South America.

Currently, we have established a relationship with Excel, which has adopted both the CIS and Solo products to enhance its food safety program. To be successful in meeting our sales goals, particularly for CIS, we will need to establish relationships with the other top packers. We believe that the benefits that have been experienced by Excel can be extended to other major beef packing companies. Nevertheless, current market conditions in the U.S. beef packer/processing segment create an additional challenge to our ability to sell CIS products in the near term. Furthermore, once a plant decides to install a CIS system, there is a significant amount of site work and retrofitting required by the plant to accommodate the VerifEYE System, resulting in as much as six months lead time between the decision to adopt our CIS technology at a plant location and the point at which eMerge recognizes revenue.

The U.S. beef production industry is cyclical, as producers respond to beef prices by increasing or decreasing the size of the cattle herd. Recent factors, including an ongoing trade dispute between the U.S. and Japan and the termination of the cattle trade between the U.S. and Canada, have come together to create poor market conditions in key segments of the U.S. beef industry. The discovery, in December 2003, of BSE in the U.S., has led to the closing of the beef trade between the U.S. and Japan, which has subsequently impacted the financial stability of U.S. packers in 2004 and 2005 as they see a $3 billion dollar export market disappear. Furthermore, the BSE discovery initiated the closure of live-cattle trade between the U.S. and Canada, which also puts a financial burden on the meat packer who has had to pay increasingly elevated cattle prices. As the domestic cattle supply dwindled in late 2004 several major packers announced reduced production levels and even plant closures, citing economic losses related to the limited cattle supply. The net result of these developments has been a reduction in U.S. cattle supply and prices and unfavorable prospects for some segments of the industry in 2005. Among other implications of these industry conditions is that key industry segments have reduced discretionary capital spending, which could have a material adverse effect on our prospects. Sales of large capital equipment such as the CIS into market conditions such as these will be challenging and we believe will be impacted by the financial condition of our packer clients and prospects.

The BSE discovery in the U.S., has made cattle identification and tracking important issues to the U.S. beef industry, and increased the level of interest in our CattleLog individual identification product. One example of a business engagement resulting from this increased interest is our contract with ADM Alliance Nutrition (“ANI”), a wholly owned subsidiary of Archer Daniels Midland, executed in January 2004, pursuant to which ANI selected our CattleLog individual-animal data collection and reporting system to manage its electronic data collection and analysis and information exchange efforts. ANI, a leading supplier of livestock feeds, offers the CattleLog program to cattle producers who purchase ANI’s feed and feed supplements.

In January 2004, CattleLog was the first animal tracking solution to receive approval as a USDA PVP. The USDA PVP designation involves a comprehensive approval process, which began in June 2003, and provides independent verification that our policies and procedures are designed to ensure the integrity and security of the data collected with our systems. CattleLog is designed to be a key tool that allows our customers, from small

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operators to commercial feedlots, to track and identify animals through the supply chain. In June 2004, CattleLog was re-approved as a PVP by the USDA Agricultural Marketing Service. The PVP requires an annual re-approval process.

On August 17, 2004, the U.S. House of Representatives Committee on Agriculture released a statement regarding the status of the USDA’s National Animal Identification System (“NAIS”). The statement confirmed that initial funding of $17 million had been provided to develop the NAIS. An additional $33 million has been allocated in the fiscal 2005 federal budget, primarily for infrastructure development, producer outreach and education and additional pilot projects. The USDA plans for the NAIS to include only information for animal and disease tracking purposes. Proprietary production data will remain in private databases. Although the USDA has continued to work towards implementation of the NAIS program, the production segments of the industry (producers, auction barns and feedlots) have been reluctant to make decisions on adopting any technology until they fully understand what their responsibilities and obligations will be under the NAIS or how to participate in supplying source-verified cattle into a retail driven program.

The primary market force that may positively impact the adoption of our CattleLog systems is the lobbying of beef retailers, including large grocery stores and restaurant chains, particularly fast food chains, which are exerting pressure on the beef industry to have traceability for all beef sold. Additionally, in October 2004, the USDA announced the establishment of a new marketing program, known as the Beef Export Verification (“BEV”) Program, which outlines the proposed criteria for the resumption of beef trade with Japan, formerly the U.S.’s largest beef export market. One of the optional criteria included in the program is the use of USDA Process Verified Animal Identification and Data Collection Services to ensure the animals exported to Japan are 20 months of age or younger at the time of harvest. Since our CattleLog system is currently a USDA-approved PVP, providing animal data collection and reporting services, we believe we are well positioned to be a significant part of the BEV effort. However, it is still too early to predict the magnitude and timing of demand, which will largely depend on which BEV method is adopted by the industry and the legislated implementation schedule for the BEV measures. At this time, the USDA has not issued a final policy regarding export of beef products to Japan.

The market forces of the NAIS, demand by major retailers for source-verified beef, and the requirement for a comprehensive system to enable trade with Japan, the industry’s largest and most lucrative export market, improve the chances of CattleLog’s adoption within the beef industry. However, there can be no assurance that this will happen in the near future or at all or, if it does, that we will be able to market CattleLog profitably on a large scale.

ANIMAL INFORMATION SOLUTIONS

INDUSTRY BACKGROUND

The Company’s activities in animal identification in agriculture are primarily related to beef production. According to the National Cattlemen’s Beef Association and Colorado State University, the cattle industry is the largest single segment of the American agricultural economy. On January 1, 2005, there were 95.8 million cattle in the United States, one percent more than a year earlier. Total beef production in 2004 is estimated to be 24.5 billion pounds. Beef is the number one protein source in America, according to USDA consumption data.

The U.S. beef production chain can be classified into three primary segments: producers, feedlots and packers, each responsible for one part of the process for the birth, growth, and eventual harvest of livestock products. There are approximately 800,000 ranchers and cattlemen in the United States, conducting business in all 50 states. The industry grows progressively more concentrated as animals move through feedyards and finally to processors. Approximately 80% of the beef in the United States is processed by beef packing operations owned by four of the largest beef packing companies.

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In addition to beef cattle, our data system has also been used for the dairy cattle, equine, sheep, and goat industries. However, we do not anticipate that any of these other industries will become significant to our business.

We believe that modern livestock production processes contain a number of inefficiencies that reduce livestock quality and increase cost, and that these inefficiencies can best be addressed through the adoption by the industry of efficient and secure data capture, storage, and retrieval of individual animal information. In addition, as a result of potential disease outbreaks and the potential for terrorist activity affecting the food supply, demand has been created for beef products that can be traced back through the supply chain to the source. Additionally, market factors have created demand for specification products that, we believe, is not currently being satisfied.

We believe that industry participants generally collect and analyze information on livestock in an inconsistent, manual and time-consuming manner. Due to the inefficient nature of data collection and dissemination, livestock industry participants are unable to exchange critical information in an efficient and timely manner to optimize performance and beef quality. Evidence suggests that opportunities exist for businesses in the livestock industry to maximize the use of information, which may more effectively address marketing, health, quality and performance issues.

With the discovery of the first-ever case of BSE in the United States by the USDA in December 2003, animal identification and tracking have become important issues for the U.S. livestock industry. The subsequent BSE investigation revealed that the BSE infected animal was of Canadian origin. The work by USDA to trace the animal’s origins yielded positive identification of some, but not all, of the other animals that had come into contact with or were related to the infected animal, all testing negative for BSE. If a mandatory animal identification system had been in place in the U.S., we believe this traceback process would have been completed in a matter of days, rather than the weeks it took in this case. Lack of a system to identify animals that had been in contact with an infected animal has been a contributing factor to certain international markets being closed to U.S. beef exports.

As a result of the closure of export markets to U.S. beef due to continued speculation regarding the risk of BSE in the food supply, our customers—for both FST and AIS- will most likely face unpredictable economic conditions for a period of time. Though the U.S. beef supply is among the safest in the world, and BSE testing, safeguards and surveillance monitoring have been in place since 1990, we expect livestock markets and food-related equities to be negatively impacted for the foreseeable future until all markets are re-opened.

We believe that an improved information flow between and within industry participants can significantly enhance opportunities for additional revenues and cost savings for the beef industry. We believe there is currently no network or method for rapidly compiling and communicating information throughout all stages of the livestock production chain. There is also a growing retail demand for process- and source-verified meat that has created a potential opportunity for our AIS operations to provide such verification products or services. Therefore, our products and services are directed at individual-animal tracking, supply-chain documentation and food safety in order to facilitate the safe, timely flow of source- and process-verified livestock and meat products within the livestock-production supply chain.

OUR PRODUCTS AND SERVICES

CattleLog Data Collection

CattleLog is a suite of individual-animal data-collection and reporting tools designed to help livestock operations electronically track animals and relevant production data on these animals, and is positioned to take advantage of a number of market or production opportunities, as discussed below.

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CattleLog users can create continuously updated profiles that follow animals from birth through harvest, including specifications covering everything from genetics to health management. Previous and subsequent owners can then easily access the information via the CattleLog Reports web site in order to:

In addition, CattleLog is designed to help maintain consumer confidence in the safety of the U.S. livestock herd in the event that a large-scale animal-health issue should arise in the U.S. If wide-scale adoption is achieved, we believe CattleLog would help officials quickly trace disease sources, focus remedial action only where needed and ensure consumers that the meat they purchase is safe.

Components of CattleLog include CattleLog Data Services (“CDS”), CattleLog Pro and CattleLog Reports. CDS allows smaller or seasonal producers to take advantage of CattleLog technology with a minimal investment in technical infrastructure. For high-volume users, CattleLog Pro software provides advanced features for high volume operations. CattleLog Reports allows producers to view and work with their data in an industry-leading reports generation program.

USDA Process Verified Program

In 2003, we received USDA Process Verified Program (“PVP”) approval for all CattleLog products, becoming the first data service provider to be granted this important designation. We believe our CattleLog customers benefit from this verification program and the combination of data quality and integrity that we believe is reflected by the USDA PVP designation.

The USDA PVP provides livestock and meat producers an opportunity to assure customers of their ability to provide consistent quality products by having their written production or operational processes confirmed through independent, third party audits. The USDA PVP uses the International Organization for Standardization’s ISO 9000-series standards for documented quality management systems as a format for evaluating documentation to ensure consistent auditing practices and promotes international recognition of audit results. To operate an approved USDA PVP, companies must submit documented quality management systems to the Livestock and Seed Program, Audit, Review, and Compliance Branch (“ARC”), within the Agriculture Marketing Service, and successfully pass a rigorous onsite audit per ARC instructions.

Professional Cattle Consultants

During 2004, we also operated the Professional Cattle Consultants (“PCC”) group that provided data analysis and benchmarking to feedlots. The PCC business generated revenues of approximately $125,000 in 2004 and generated a small loss from operations. We sold this business on March 9, 2005.

FOOD SAFETY TECHNOLOGIES

INDUSTRY BACKGROUND

Within the food industry, our current VerifEYE products, CIS and the Solo handheld scanning system, primarily serve the beef-processing sector. In addition, we are currently developing a VerifEYE-based hand hygiene system, HandScan, which we believe will enable us to expand into the food retail and foodservice markets. Our products focus primarily on the reduction of food-borne illness,

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through the instant detection of organic contaminates, which can enter the food supply via contaminated meat products, hands or cross contamination.

If additional product development is successfully completed, we believe that we also may have the ability to enter the healthcare and long-term care markets to help address significant healthcare issues related to disease transmission and hospital-acquired infections.

Recent factors, including an ongoing trade dispute between the U.S. and Japan and the termination of the cattle trade between the U.S. and Canada, have come together to create poor market conditions in key segments of the U.S. beef industry. The discovery, in December 2003, of BSE in the U.S., led to the suspension of approximately $3 billion of annual beef exports. This impacted the financial results of U.S. packers in 2004 and their prospects for 2005. Furthermore, the BSE discovery initiated the closure of live-cattle trade between the U.S. and Canada, which also put a financial burden on meat packers who have had to pay increasingly elevated cattle prices. As the domestic cattle supply dwindled in late 2004, several major packers announced reduced production levels and plant closures, citing economic losses related to the limited cattle supply. The result of these developments has been a reduction in U.S. cattle supply and unfavorable prospects for some segments of the industry in 2005. Among other implications of these industry conditions is that key industry segments have reduced discretionary capital spending, which could have a material adverse effect on our prospects.

Each year, an estimated 76 million cases of food-borne illness occur in the United States. As a result, the U. S. Centers for Disease Control (“CDC”) estimates that there are 325,000 hospitalizations and 5,000 deaths attributed to food-borne illness in the United States each year. Food-borne illness can be caused by the ingestion of many different types of bacteria and viruses, including E. coli O157:H7, Listeria, Salmonella, Shigella, Norovirus, Hepatitis A and others.

Food can become contaminated in both the food production and foodservice stages. Pathogens may be present in the intestines of meat-animals raised for food, and during the slaughter process small amounts of organic contamination (intestinal contents) can contaminate the carcass, causing potential food safety risks.

In the food processing and foodservice stages, pathogens can be transferred to food from infected food handlers, or by cross contamination from other food products. In food-borne illness outbreaks attributable to pathogens such as Shigella, Norovirus and Hepatitis A, the hands of food workers who have not washed effectively after using the bathroom may be identified as the primary source responsible for contamination. According to the CDC, there are over 18 different viral, bacterial, and parasitic gastroenteritis illnesses whose primary mode of transmission has been identified as the fecal-hand-oral route. In addition, the CDC estimates that up to 23% of food-borne illnesses occur as a result of poor hygiene and cross-contamination.

We believe our VerifEYE technology, if widely adopted, can significantly reduce the amount of organic contamination on meat carcasses and the hands of food handlers. Until now, the only way to identify organic contamination has been through visual inspection, which means that the amount of contamination must be large enough to see. However, the VerifEYE technology can provide a much more sensitive and objective inspection method, often detecting contamination that is invisible to the human eye.

According to the CDC, hand hygiene is the single most important practice in preventing infections in healthcare facilities. Nevertheless, a report published in a March 2002 CDC publication entitled “Emerging Infectious Diseases” indicated that the largest hospital-wide survey ever conducted found that proper hand hygiene prevents cross-contamination in hospitals, but health-care workers’ adherence to guidelines is poor. The study found that the average compliance with hand hygiene programs among different sections of hospitals, including open ward, emergency room, intensive care and others, was only 48 percent.

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OUR PRODUCTS AND SERVICES

VerifEYE

VerifEYE is our food safety technology that was originally developed and patented by scientists at Iowa State University and the Agricultural Research Service of the USDA. We hold a license granting us exclusive rights to its global commercialization. In 2003, we introduced two commercial products that use our VerifEYE technology, the CIS unit and the Solo handheld inspection unit.

The USDA Agricultural Research Service, in trials conducted at Oklahoma State University and at the University of Florida, has confirmed that this imaging technology can detect even microscopic traces of fecal material on freshly harvested beef—including beef that has been subjected to such pathogen interventions as acid washes, irradiation and steam pasteurization.

The VerifEYE CIS is a real-time, optical inspection system that scans beef carcasses at line speeds up to 450 head per hour as they proceed through the production line. This system creates a visual image of potentially contaminated areas of each carcass, displaying them on a nearby monitor for easy identification and removal. The system also collects, displays and archives data related to the contaminated locations for each carcass as it is processed. This data can be integrated into an overall food safety, quality or Hazard Analysis and Critical Control Point (“HACCP”) program. This patented technology helps meat processors detect contamination and verify extensive safeguards already in place to minimize the possibility of outbreaks of such bacterial infections as E. coli 0157:H7 and salmonella.

In 2002, we announced an agreement to integrate our VerifEYE meat inspection system into Excel Corporation’s beef operations to finalize our specifications for commercialization of the VerifEYE system. Excel Corporation (“Excel”) is a leading U.S. beef processor and a wholly-owned subsidiary of Cargill Incorporated, an international marketer, processor and distributor of agricultural, food, financial and industrial products and services. During 2003, we installed our first CIS unit at an Excel beef plant in Schuyler, Nebraska. In February 2004, we shipped a second CIS unit to an Excel beef plant in Plainview, Texas and completed the installation in May 2004. The third CIS unit was shipped in September 2004 to an Excel beef plant in Ft. Morgan, Colorado and the installation was completed in January 2005. These CIS units are subject to lease agreements, which include a provision for an accelerated lease payment due upon shipment of each CIS unit in lieu of 36 monthly lease payments. We do not start to recognize revenues on these leases until the units have been installed. While we continue to market our CIS products to Excel for use at their remaining North American beef plants and to other beef processors, the current state of the U.S. beef industry creates an additional challenge to our ability to sell additional CIS products in the near term.

The Solo handheld inspection unit is a portable instrument, incorporating the VerifEYE imaging technology. Its lightweight and simple features allow it to be used in many locations throughout the meat processing and retail environments. The Solo unit can be used to verify the presence or absence of any trace levels of organic material on meat products and other surfaces, which could harbor potentially deadly pathogens. Solo has been commercially available since May 2003 and is currently in use among a number of processors in the U.S. and abroad.

During 2004, we had foreign sales of Solo units in six countries. However, these sales constituted less than 8% of our total 2004 revenues and we do not believe geographic sales analyses are significant to obtaining an understanding of our business operations during the three-year period ended December 31, 2004. Information for our two operating segments for the three-year period ended December 31, 2004, is contained in note 14 to the consolidated financial statements.

TECHNOLOGY AND DEVELOPMENT

We intend to continue to devote time and resources to enhance our current core technology, to improve our existing products, expand our product line and enter into other market segments. Our R&D pipeline currently

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includes projects such as the development of the VerifEYE-based HandScan system for the detection of contaminates on hands of workers in the foodservice, healthcare, childcare and nursing home industries.

In September 2002, we conducted an initial private study with a Florida-based hospital that established the efficacy of the VerifEYE food safety technology for detecting human bio-hazardous contamination, including feces. In mid 2003, we continued our R&D efforts on the hand-scanning project by conducting a second study, designed to document dietary-related variables and their potential impact on our technology’s capability to detect human fecal material. Based on the results of our studies, we continued to develop the technical approach and evaluate the marketability of a VerifEYE-based system for the detection of contaminates on human hands. In late 2003, we established a formal R&D program for the project, further dedicating resources to this potential opportunity.

In 2004, our VerifEYE development efforts were focused on the development of our HandScan System and the further refinement of our CIS and Solo products. Primary activities related to HandScan in 2004 included further spectral research, algorithm development and overall system design of a multi-chromatic imaging system for the HandScan product with the goal to improve system performance for the detection of contamination on human hands.

As we continue to expand our VerifEYE technology for alternative applications including the development of human health applications, we expect these costs to increase in 2005. Approximately $2.2 million, $1.7 million and $2.9 million for the years ended December 31, 2004, 2003 and 2002, respectively, were related to technology and development spending. Our current technology and development activities are primarily focused on expanding our VerifEYE products, as discussed above.

However, if the current negative economic conditions in the beef packing/processing industry persist and we are unable to expand sales of our VerifEYE products, we may choose to reduce or postpone spending on the development of new products.

SALES AND MARKETING

Our AIS sales organization is structured around a direct sales team and a limited number of strategic partners. Our account managers are responsible for sales of products and services to animal identification customers in given geographic territories. We seek to establish broad customer awareness of our technologies, products and services within the industries we serve.

Our marketing efforts include direct advertising through trade journals, press releases, and significant presence at local, state and national industry meetings and events. We also participate in professional societies and university programs and have developed strategic marketing relationships with industry professionals and academic institutions. Much of the initial interest in our products and services has been created through the extensive network of relationships we have in the livestock industry as well as through our sales organization.

Our FST sales and distribution network utilizes several domestic and international independent distributors and manufacturers representatives to serve our markets effectively. We select only distribution partners who have already established relationships with potential FST customers and who are also representing food safety or sanitation-oriented products, which would be complementary to the VerifEYE technology.

We are in the process of identifying potential distribution partners for our VerifEYE HandScan product, with the plan of forming partnership distribution relationships with leaders in their respective fields such as healthcare, foodservice, food processing, retail and daycare. Additionally, in December 2004, we signed a distribution agreement pursuant to which Mettler Toledo’s Safeline Metal Detection division (“Safeline”), has agreed to distribute Solo units to the meat processing sectors in the Americas.

OUR CUSTOMERS

For AIS, our customer focus is the livestock producer who sees a need for advanced animal identification in their own operation, from individual producers through packers. FST is focused on packers, processors and food retailers.

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In 2004 and 2003, Excel, a FST customer, accounted for 53% and 25%, respectively, of our net revenue. In 2002, Rancher’s Renaissance, an AIS customer, accounted for 38% of our net revenue. We anticipate that our operating results will continue to depend on sales to a relatively small number of significant customers. The loss of any of these customers, or a significant reduction in sales to any such customers, would adversely effect our revenues, results of operations and financial condition.

As noted in “How We Operate” key segments of the beef industry are currently experiencing poor market conditions, which could adversely effect sales of our products and services.

INTELLECTUAL PROPERTY

Our ability to protect and utilize our intellectual property rights is important to our continued success. We currently have multiple U.S. and foreign patent applications that are pending before the U.S. Patent and Trademark Office and related foreign agencies regarding:

U.S. patent number 5,914,247, relating to technology for detecting organic contamination on meat carcasses during and after slaughter is licensed to us by the Iowa State University Research Foundation and the USDA under a license agreement entered into in August 1999. Our FST business is highly dependent on our continued maintenance of this license. U.S. patent number 5,914,247 provides protection for both our CIS and our Solo handheld inspection system. Additional patent applications for this technology were filed and are currently pending in four of the main beef processing countries, and the patent for Australia was issued in 2004. The license provides us with an exclusive worldwide license, until the patents expire on a country-by-country basis, to develop and sell products and services that utilize the inventions contained in the patents. In exchange for the license, we are obligated to pay Iowa State University a royalty on revenues we receive from the sale of products and services related to the license.

We believe our commercial success depends on our ability to protect our proprietary technology and enforce our rights in the technology we license to other parties. We currently rely on a combination of patents, copyrights and trade secrets to protect our proprietary technology and look for ways to strengthen our IP position through license agreements and other methods where applicable.

We cannot guarantee that any of our pending patent or trademark applications will be approved. Even if they are approved, the patents or trademarks may be challenged by other parties, infringed upon or invalidated. In technology markets, there is generally frequent and substantial intellectual property litigation. We may become subject to legal proceedings and claims, including claims that we infringe upon third-party proprietary rights. There can be no assurance that third parties will not assert patent, copyright or other infringement claims against us that could prevent us from manufacturing and commercializing our products or services in the United States and abroad.

We have a number of Trademark applications pending with the U.S. Patent and Trademark Office to register eMerge Interactive^™, VerifEYE^™, Solo^™ and HandScan^™ and related service marks. The following Trademarks have been registered with the U.S. Patent and Trademark Office; eMerge Interactive^®, VerifEYE^® and CattleLog^®. Additionally, we have a number of foreign trademarks both pending and registered.

COMPETITION

Our AIS segment competes against other companies in the information services market, including established livestock information services. We also face competition from livestock product manufacturers who use information technology to promote the effectiveness of their products. These services are often provided in

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connection with the sale of products to industry participants. We believe that the primary competitive factors in the information services market include perceived value relative to price, timeliness of information, brand recognition, value-added consulting services and convenience and ease of use.

We believe that no other company directly competes against our VerifEYE technology. However, we believe that we compete indirectly against other systems and technologies designed to eliminate or reduce pathogens on meat products, commonly known as microbial interventions, including steam pasteurization, thermal pasteurization, hide wash systems, organic acid rinses and irradiation. Some of the companies marketing these systems and technologies have significantly greater resources than ours, which may effect our ability to compete with their products or services.

EMPLOYEES

As of March 10, 2005, we employed a total of 42 persons, all of whom work with us on a full-time basis. We are not subject to any collective bargaining agreements, and we believe that our relationship with our employees is good.

ITEM 2.    PROPERTIES

The location and general description of our properties as of March 1, 2005, are described below.

Corporate Headquarters

Our corporate facility is located at 10305 102^nd Terrace in Sebastian, Florida, where we currently occupy approximately 25,000 square feet of office, administrative and data center space. We lease our facilities from XL Realty, Corp., a subsidiary of Safeguard Scientifics, Inc. (Safeguard”), one of our largest shareholders. Our lease for this facility expires on March 31, 2006.

Other Facilities

We maintain sales and support offices for AIS in Ft. Worth, Texas, under a lease, which expires on April 30, 2005.

Through February 2005, we maintained sales and support offices in Weatherford, Oklahoma, which were rented on a month-to-month basis, to support our PCC operation. We sold the PCC operation on March 9, 2005.

ITEM 3.    LEGAL PROCEEDINGS

We have been named as a defendant in a lawsuit filed by Central Biotech, Inc. on January 12, 2000 in the Queen’s Bench Judicial Centre of Regina, Province of Saskatchewan, Canada. The complaint alleges that we and E-Y Laboratories Inc. were each subject to confidentiality agreements with the plaintiff, and subsequently engaged in discussions concerning a potential business arrangement allegedly in violation of these agreements. The complaint asserts damages, including punitive damages, from the defendants in the aggregate amount of $18 million (Canadian dollars), as well as injunctive relief. We believe the case to be without merit and intend to defend it vigorously.

We are involved in various other claims and legal actions arising in the ordinary course of business. Our opinion is that the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 2004.

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PART II

Our Class A common stock trades in the NASDAQ SmallCap Market under the symbol “EMRG.” The price range per share reflected in the table below is the highest and lowest sale price for our stock as reported by the NASDAQ SmallCap Market during each quarter of the last two fiscal years:

As of March 10, 2005, the last reported sale price for our common stock on the NASDAQ SmallCap Market was $1.04 per share and we had 514 registered holders of record of our common stock.

We have never declared or paid any dividends on our common stock. We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and the expansion of our business. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, operating results, capital requirements and such other factors as the board of directors deems relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

The equity compensation plan approved by shareholders consists of our Amended and Restated 1999 Equity Compensation Plan.

Recent Sales of Unregistered Securities

In March 2002, Runnells Peters Cattle Company received additional consideration in compliance with an acquisition agreement of a cattle brokerage company. As part of this consideration, we issued 338,752 shares of our Class A common stock with an aggregate value of $500,000.

In December 2002, Timothy R. Pennell received additional consideration in compliance with the acquisition agreement of a cattle brokerage company. As part of this consideration, we issued 51,370 shares of our Class A common stock with an aggregate value of $30,051, based on the average closing price per share on February 25, 2002 of $0.585, per the terms of the acquisition agreement.

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In July 2003, Hefley Order Buying Company received additional consideration in compliance with an acquisition agreement of a cattle brokerage company. As part of this consideration, we issued 79,791 shares of our Class A common stock with an aggregate value of $100,467, based on the average closing price per share for the 20 business days immediately preceding August 31, 2001 of $1.2585, per the terms of the acquisition agreement.

In September 2003 and October 2003, we issued an aggregate of 60,000 shares of our Class A common stock to Investor Relations International as consideration for investor relations services.

On November 20, 2003, we issued 1,605,136 shares of our Class A common stock at $0.623 per share and warrants exercisable for 802,568 shares of our Class A common stock at an exercise price of $0.98 per share to The Biegert Family Trust for $1.0 million in cash. The warrants expire on November 21, 2008. These shares and the shares issuable upon exercise of the warrants were subsequently registered with the SEC, effective January 12, 2004.

On January 23, 2004, we issued 2,333,333 shares of our Class A common stock at $3.00 per share, additional investment rights exercisable for 830,508 shares of our Class A common stock at an exercise price of $3.00 per share and warrants exercisable for 830,508 shares of our Class A common stock at an exercise price of $3.6875 per share to Mainfield Enterprises, Inc., Cranshire Capital L.P., Smithfield Fiduciary LLC and Omicron Master Trust for $7.0 million in cash. The additional investment rights expired unexercised on July 13, 2004. The warrants were repriced to have an exercise price of $1.40 per share in January 2005. As part of this transaction, we also issued warrants exercisable for 163,333 shares of our Class A common stock at an exercise price of $3.73 to the placement agent as consideration for providing financial and advisory services. These shares and the shares issuable upon exercise of the warrants and additional investment rights were subsequently registered with the SEC, effective April 16, 2004.

On December 2, 2004, we issued 2,500,000 shares of our Class A common stock at $1.60 per share, additional investment rights exercisable for 1,250,000 shares of our Class A common stock at an exercise price of $1.60 per share and warrants exercisable for 875,000 shares of our Class A common stock at an exercise price of $2.00 per share to Steelhead Investments Ltd., Cranshire Capital LP and Omicron Master Trust for $4.0 million in cash. As part of this transaction, we also issued warrants exercisable for 150,000 shares of our Class A common stock at an exercise price of $2.30 per share to the placement agent as consideration for providing financial and advisory services. These shares and the shares issuable upon exercise of the warrants and additional investment rights were subsequently registered with the SEC, effective January 6, 2005. The investment rights are exercisable any time prior to the 180^th trading day following the effectiveness of the registration statement.

On January 27, 2005, we issued 2,900,000 shares of our Class A common stock at $1.40 per share and warrants exercisable for 435,000 shares of our Class A common stock at an exercise price of $1.75 per share to Steelhead Investments Ltd., Cranshire Capital LP and Omicron Master Trust for $4.1 million in cash. We intend to file a registration statement for these shares and the shares issuable upon exercise of the warrants with the SEC in March 2005, following the filing of this Form 10-K.

We have used and will use the proceeds of each issuance of securities for cash, discussed above, for general corporate purposes.

All of the above referenced shares were issued pursuant to an exemption from registration provided in Section 4(2) of the Securities Act of 1933. The issuances were made without general solicitation or advertising. Each purchaser represented that he, she or it was acquiring without a view to distribute and was afforded an opportunity to review all documents and ask questions of our officers pertaining to matters they deemed material to an investment in our Class A common stock.

There have been no purchases of or plans to purchase our equity securities made by or on behalf of us during the three months ended December 31, 2004.

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The financial information set forth below may not be indicative of our future performance and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this report and our Consolidated Financial Statements and Notes thereto, which are included in this report.

The following table summarizes our statement of operations data for the years indicated: