CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
-OR-
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

-OR-

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-26988

ERGO SCIENCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		04-3565746
(State or other jurisdiction of		(I.R.S. Employer
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
incorporation or organization)		Identification Number)
790 Turnpike Street North Andover, Massachusetts		01845
790 Turnpike Street
North Andover, Massachusetts		01845
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (978) 688-8833

Registrant’s telephone number, including area code: (978) 688-8833

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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.)

Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

At ~~April 30~~August 8, 2005 there were 5,813,856 shares of common stock (net of 1,335,722 shares of treasury stock), par value $.01 per share, of the registrant outstanding.

ERGO SCIENCE CORPORATION

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION
	ITEM 1.		~~Financial Statements~~	Financial Statements
			Unaudited Condensed Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004
				Unaudited Condensed Consolidated Balance Sheet as of June 30, 2005 and the Nexus Media (Predecessor) Balance Sheet as of December 31, 2004
			Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004
				Unaudited Condensed Consolidated Statement of Operations for the three months ended June 30, 2005 and the Nexus Media (Predecessor) Statements of Operations for the three months ended March 31, 2005 and the three and six months ended June 30, 2004
			Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004
				Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2005 and the Nexus Media (Predecessor) Statements of Cash Flows for the three months ended March 31, 2005 and the six months ended June 30, 2004
			~~Unaudited Notes to Condensed Consolidated Financial Statements~~	Unaudited Notes to Condensed Consolidated Financial Statements
	ITEM 2.		~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	ITEM 3.		~~Quantitative and Qualitative Disclosures About Market Risk~~	Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4.		~~Controls and Procedures~~	Controls and Procedures
PART II.		OTHER INFORMATION
	ITEM 1.		Legal Proceedings
	ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds
	ITEM 3.		Defaults Upon Senior Securities
	ITEM 4.		Submission of Matters to a Vote of Security Holders
	ITEM 5.		Other Information
	ITEM 6.		Exhibits
SIGNATURES
INDEX TO EXHIBITS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ERGO SCIENCE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2005			December 31, 2004
	Ergo				Predecessor Nexus Media
ASSETS
	June 30, 2005				December 31, 2004
Current assets:
ASSETS
Cash and cash equivalents	$	26,136,046		$	26,453,190
Current assets:
Prepaid and other current assets	61,878			10,537
Cash and cash equivalents	$	6,313,986			$	1,710,235
Capitalized acquisition costs	779,469			—
Trade receivables (net of allowance of doubtful accounts at June 30, 2005: $55,411 and December 31, 2004: $276,000)	5,249,052				6,851,599
Total current assets	26,977,393			26,463,727
Inventory	382,820				554,818
Total assets	$	26,977,393		$	26,463,727
Deferred taxes	—				422,836
LIABILITIES AND STOCKHOLDERS’ EQUITY
Prepaid and other current assets	4,423,127				1,766,037
Current liabilities:
Total current assets	16,368,985				11,305,525
Accounts payable and accrued expenses	$	965,368		$	408,283
Property & equipment, net	3,920,961				4,217,589
Income taxes payable	94,000			94,000
Intangible assets, net	6,748,592				7,146,680
Total current liabilities	1,059,368			502,283
Goodwill	10,783,438				16,368,388
Stockholders’ equity:
Receivable from Highbury House plc	—				50,903,501
Preferred stock, $.01 par value, 10,000,000 shares authorized; 6,903 shares of Series D preferred stock issued and outstanding at March 31, 2005 and December 31, 2004 (liquidation preference of $12,407,054 at March 31, 2005)	4,306,520			4,306,520
Total assets	$	37,821,976			$	89,941,683
Common stock, $.01 par value, 50,000,000 shares authorized; 7,149,578 shares issued at March 31, 2005 and December 31, 2004	71,496			71,496
LIABILITIES AND STOCKHOLDERS’ EQUITY
Additional paid-in capital	111,880,321			111,880,321
Current liabilities:
Cumulative dividends on preferred stock	(2,296,953		)	(2,296,953		)
Accounts payable	$	1,851,543			$	4,114,947
Accumulated deficit	(85,625,702		)	(85,582,283		)
Accrued expenses and deferred revenue	11,424,097				6,462,697
Treasury stock (at cost), 1,335,722 shares at March 31, 2005 and December 31, 2004	(2,417,657		)	(2,417,657		)
Other creditors	681,932				426,793
Total stockholders’ equity	25,918,025			25,961,444
Payable to Highbury House plc	—				3,413,116
Total liabilities and stockholders’ equity	$	26,977,393		$	26,463,727
Income taxes payable	94,000				—
Total current liabilities	14,051,572				14,417,553
Other long-term liabilities (Highbury House plc)	—				32,035,520
Stockholders’ equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized;
6,903 shares of Series D preferred stock issued and outstanding at June 30, 2005 (liquidation preference of $12,592,252 at June 30, 2005)	4,306,520				—
Common stock, $.01 par value, 50,000,000 shares authorized;
7,149,578 shares issued at June 30, 2005	71,496				—
Additional paid-in capital	111,880,321				—
Cumulative dividends on preferred stock	(2,296,953		)		—
(Accumulated deficit) retained earnings	(86,718,988		)		—
Treasury stock (at cost), 1,335,722 shares at June 30, 2005	(2,417,657		)		—
Cumulative translation adjustment	(1,054,335		)		—
Owners’ net investment	—				43,488,610
Total stockholders’ equity	23,770,404				43,488,610
Total liabilities and stockholders’ equity	$	37,821,976			$	89,941,683

The accompanying notes are an integral part of these condensed consolidated financial statements.

ERGO SCIENCE CORPORATION

(Unaudited)

	Three Months Ended March 31,
					Predecessor
	2005			2004
	Ergo				Nexus Media			Nexus Media		Nexus Media
Operating expenses:
	Three months ended June 30, 2005				Three months ended March 31, 2005			Three months ended June 30, 2004		Six months ended June 30, 2004
General and administrative	$	180,049		$	350,163
Net revenues	$	8,403,095			$	6,584,877		$	9,196,130	$	16,868,601
Net operating loss	(180,049		)	(350,163		)
Cost of revenues	5,892,227				6,048,974			6,081,615		12,275,584
Other Income:
Gross profit	2,510,868				535,903			3,114,515		4,593,017
Interest	136,630			58,132
Operating expenses:
Net loss	$	(43,419	)	$	(292,031	)
General and administrative	3,124,413				1,648,391			2,113,186		4,059,461
Net Loss per common share:
Amortization of intangibles	51,967				52,951			50,598		102,077
Basic and Diluted	$	(0.01	)	$	(0.05	)
Impairment of intangibles	—				—			49,694		100,253
Weighted average common shares outstanding:
Total operating expenses	3,176,380				1,701,342			2,213,478		4,261,791
Basic and Diluted	5,813,856			5,813,856
Net operating (loss) income	(665,512		)		(1,165,439		)	901,037		331,226
Other Income:
Interest income	28,328				69,971			56,380		113,742
Net (loss) income before taxes	(637,184		)		(1,095,468		)	957,417		444,968
Income tax expense (benefit)	456,102				(80,639		)	324,843		169,377
Net (loss) income	$	(1,093,286	)		$	(1,014,829	)	$	632,574	$	275,591
Loss per common share:
Basic and Diluted	$	(0.19	)
Weighted average common shares outstanding:
Basic and Diluted	5,813,856

The accompanying notes are an integral part of these condensed consolidated financial statements.

ERGO SCIENCE CORPORATION

ERGO SCIENCE CORPORATION

~~/s/ Charles E. Finelli~~

/s/ Charles E. Finelli

Charles E. Finelli

President, Chief Executive Officer, and acting Chief Financial Officer,

Principal Executive and Principal Financial and Accounting Officer

~~May~~August 1619, 2005

(Unaudited)

	Three Months Ended March 31,
					Predecessor
	2005			2004
	Ergo Science Consolidated Three months ended June 30, 2005				Nexus Media Three months ended March 31, 2005			Nexus Media Six months ended June 30, 2004
Cash flows from operating activities:
Net cash provided by (used in) operating activities	2,296,849				(1,575,574		)	(22,690		)
Net loss	$	(43,419	)	$	(292,031	)
Cash flows from investing activities:
Adjustments to reconcile net loss to cash used in operating activities:
Purchase of property and equipment	(4,697		)		(112,438		)	(238,702		)
Depreciation and amortization	—			288
Proceeds on disposal of property and equipment	—				—			72,448
Changes in operating assets and liabilities:
Acquisition of Nexus Media	(22,032,581		)		—			—
Prepaid and other current assets	(51,341		)	(62,077		)
Net cash used in investing activities	(22,037,278		)		(112,438		)	(166,254		)
Accounts payable and accrued expenses	(205,203		)	(2,288		)
Net decrease in cash and cash equivalents	(19,740,429		)		(1,688,012		)	(188,944		)
Income taxes payable	—			(94,000		)
Effect of exchange rates on cash and cash equivalents	(81,631		)		(22,223		)	13,263
Net cash used in operating activities	(299,963		)	(450,108		)
Cash and cash equivalents at beginning of period	$	26,136,046			$	1,710,235		$	733,879
Cash flows from investing activities:
Cash and cash equivalents at end of period	$	6,313,986			$	—		$	558,198
Payments for capitalized acquisition costs	(17,181		)	—
Net cash used in investing activities	(17,181		)	—
Net decrease in cash and cash equivalents	(317,144		)	(450,108		)
Cash and cash equivalents at beginning of period	26,453,190			27,102,617
Cash and cash equivalents at end of period	$	26,136,046		$	26,652,509

The accompanying notes are an integral part of these condensed consolidated financial statements.

ERGO SCIENCE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ~~Basis~~ Nature of ~~Presentation~~Operations

~~The~~Ergo Science Corporation ~~accompanying~~(the ~~financial~~“Company” ~~statements~~or ~~are~~“Ergo”) ~~unaudited~~acquired ~~and~~the ~~have~~business ~~been~~to ~~prepared~~business bypublishing ~~Ergo~~division ~~Science~~(“Bcom” ~~Corporation~~or (“~~Ergo~~Nexus Media Communications” or ~~the~~“Nexus Media”) of Highbury House Communications plc (“~~Company~~Highbury House”), a company organized under the laws of the United Kingdom on April 1, 2005. The purchase price of GBP 12.5 million (approximately $23.395 million) was subject to a post-closing adjustment based on the actual working capital of Nexus Media on the date of the closing. At closing, the Company paid Highbury House GBP 11.459 million (approximately $21.555 million), which represented the estimated amount of the final purchase price for Nexus Media after such adjustment. The working capital adjustment was determined to be GBP 464,000 (approximately $873,000) favorable to the Company with this additional amount to be received sometime in ~~accordance~~the third quarter. As of June 30, 2005, the Company had paid a total $22,032,581 related to the Nexus Media acquisition, which includes $477,000 in capitalized acquisition costs. The acquisition was funded by the Company with ~~generally~~its own cash and cash equivalents. Nexus Media, comprising eight ~~accepted~~wholly-owned ~~accounting~~subsidiaries ~~principles~~provides information across a diverse range of sectors including printed and web-based magazines, data services and directories, staging exhibitions, conferences and award ceremonies.

~~Certain~~Nexus ~~information~~Media’s ~~and~~business ~~footnote~~includes: ~~disclosure~~13 ~~normally~~trade ~~included~~names in(including: ~~the~~Checkout; ~~Company’s annual~~Electrical ~~financial~~Times; ~~statements~~Independent ~~have~~Grocer; ~~been~~The ~~condensed~~Motor orShip; ~~omitted. The~~World ~~interim~~Travel ~~financial~~Guide; ~~statements,~~and inMotor Trader); ~~the~~150 domain names (including: columbusguides.com; groweroftheyear.com; ~~opinion~~harpers-wine.com; ofmotorship.com; ~~management,~~motortrader.com; ~~reflect~~travel-guide.com; ~~all~~and worldfish.com); ~~adjustments~~approximately 45 magazine titles (including: ~~normal~~Motor ~~recurring~~Trader; ~~accruals~~World Fishing Magazine; Export Times; Checkout; World Travel Guide; Television World; and Electronics World); ~~necessary~~and ~~for~~approximately a35 ~~fair~~exhibitions ~~statement~~(including: European ofHotel ~~the~~Design ~~results~~Awards; ~~for~~The ~~the~~International ~~interim~~Wine ~~periods~~& Spirit Competition; ~~ended~~The ~~March 31,~~Retail ~~2005~~Industry Awards; Quality Food and ~~2004~~Drinks Awards; and Europe Power Conference and Exhibition).

~~The results~~Nexus ofMedia ~~operations~~operates ~~for the interim periods are not necessarily indicative of~~its ~~the results of operations to be expected for the fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31~~magazines, ~~2004,~~ ~~which~~events ~~are~~and ~~contained~~other inpublications ~~the~~under ~~Company’s Annual Report on Form 10-K filed with~~ the ~~Securities~~following ~~and~~legal ~~Exchange Commission.~~entities:

On• Nexus ~~April 1, 2005, the Company completed a share purchase agreement to acquire the business to business publishing division (“~~Business”) ~~of Highbury House~~ Communications ~~plc (“Highbury House”), a company organized under the laws of the United Kingdom, for a purchase price of GBP 12.5 million (approximately $23.395 million) (see note 6).~~Limited

~~Stock~~• Nexus ~~Based~~Business Media ~~Compensation~~Limited

~~Statement~~• Nexus ofMedia ~~Financial Accounting Standards No. 123,~~Communications “Accounting for Stock-Based Compensation” (“SFAS 123”) requires that companies either recognize compensation expense for grants of stock, stock options, and other equity instruments based on fair value, or provide pro forma disclosure of net income or loss and earnings or loss per share in the notes to the financial statements. The Company follows the disclosure provisions of SFAS 123 and applies APB Opinion 25 and related interpretations in accounting for its employee plans. Accordingly, no compensation cost has been recognized for its stock option plans since all options issued were for a fixed number of shares and had fixed exercise prices equal to the fair market value of the common stock on the grant date. The effects of applying SFAS 123 in this pro forma disclosure are not likely to be representative of the effects on reported income or loss for future years. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates as calculated in accordance with SFAS 123, the Company’s net loss and loss per share for the three months ended March 31, 2005 and 2004 would have been increased to the pro forma amounts indicated below:Limited

• Columbus Travel Publishing Limited

• Harpers Wines & Spirits Limited

• The International Wine and Spirit Competition Limited

• Nexus Commercial Media Limited

• Nexus Business Limited

2. Basis of Presentation

The acquisition of Nexus Media by Ergo is being treated as a purchase business combination for accounting purposes. In accordance with Rule 405 of Securities and Exchange Commission (“SEC”) Regulation C, the historical statements of Nexus Media have become the historical financials statements of Ergo, the registrant. As such, for comparative and presentation purposes, this Form 10-Q includes a condensed consolidated balance sheet (Ergo and Nexus Media) as of June 30, 2005 and a Nexus Media stand alone combined balance sheet as of December 31, 2004. The statement of operations includes a consolidated statement for the three months ended June 30, 2005 (Ergo and Nexus Media) and for comparative purposes includes the Nexus Media stand alone combined statement of operations for the three and six months ended June 30, 2004 and the three months ended March 31, 2005. The statement of cash flows includes a consolidated statement (Ergo and Nexus Media) for the three months ended June 30, 2005 and for comparative purposes includes the Nexus Media stand alone combined statement of cash flows for the three months ended March 31, 2005 and the Nexus Media stand alone combined statement of cash flows for the six months ended June 30, 2004.

Nexus Media was not a legal entity. Therefore the combined financial statements of Nexus Media have been derived from the aggregation of the financial information of the individual businesses that comprise Nexus Media and the accounting records of Highbury House. Accordingly, stockholders’ equity represents Highbury House’s net investment in Nexus Media and is described as “Owners’ net investment”.

The accompanying financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America and SEC regulations for interim financial information. Certain information and footnote disclosure normally included in the Company’s annual financial statements have been condensed or

	Three months ended March 31,
	2005			2004
Net loss:
As reported	$	(43,419	)	$	(292,031	)
Pro forma employee stock compensation expense	(1,055		)	(2,404		)
Pro forma net loss	$	(44,474	)	$	(294,435	)
Net loss per share—basic and diluted
As reported	$	(0.01	)	$	(0.05	)
Pro forma	(0.01		)	(0.05		)

omitted pursuant to such rules and regulations. The interim financial statements, in the opinion of management, reflect all adjustments (including normal recurring accruals) necessary for a fair statement of the results for the interim periods ended June 30, 2005 and 2004.

~~The~~In ~~fair~~the ~~value~~opinion of ~~each~~the Company, ~~stock~~results ~~option~~of ~~was~~operations ~~estimated~~for onthe interim periods are not necessarily indicative of the ~~date~~results of ~~grant~~operations ~~using~~to be expected for the ~~Black-Scholes~~fiscal year. These ~~option-pricing~~interim ~~model~~financial statements should be read in conjunction with the audited financial statements of Nexus ~~following~~Media ~~assumptions:~~(Bcom) for the year ended December 31, 2004, which are contained in Form 8-K/A filed with the Securities and Exchange Commission on June 17, 2005.

		2001
Expected Life		5 years
Expected Volatility		50%
Dividend Yield		0%
Weighted Average Risk-free Interest Rate		4.77%

Revenue recognition

NoThe ~~stock~~Company ~~options were~~considers ~~granted~~amounts ~~during~~to ~~the~~be ~~three~~earned ~~month~~once ~~period~~evidence ~~ending~~of ~~March 31~~an arrangement has been obtained, services ~~2005~~are delivered, fees are fixed or indeterminable and collectability is reasonably assured. Business publication revenue and pre-publication costs are recognized on the mailing date of the publication. Similarly Competition or Event revenue is ~~fiscal~~recognized ~~years~~on ~~ending~~the ~~December 31,~~date ~~2004,~~the ~~2003~~actual event takes place. Any income received or ~~2002~~costs incurred are deferred until such dates. Subscription revenue is recognized over the period of the subscription.

~~2. Cash~~Cost ~~Equivalents~~recognition

~~The~~Direct and ~~Company~~incremental ~~considers~~magazine ~~all~~costs ~~highly~~are ~~liquid~~deferred ~~investments~~until ~~with~~the amagazines ~~maturity~~are ofmailed 90to ~~days or~~the ~~less~~customer, at which point they are expensed in the income statement. Direct and incremental event costs, such as event prepayments and salary costs, are deferred until the date ofon ~~purchase~~which tothe event commences and are then expensed in the income statement. Where it is anticipated that an event will be loss ~~cash~~making, ~~equivalents~~the total anticipated loss on the event is recognized when management consider a loss likely.

~~At March 31, 2005 cash and cash equivalents were comprised of amounts held in cash money market accounts~~3. ~~At December 31, 2004, cash and cash equivalents were~~ Stock ~~comprised~~Based ~~primarily of investments in U.S. government obligations that mature within 90 days of purchase.~~Compensation

3Statement of Financial Accounting Standards No. ~~Net~~ 123, “Accounting for Stock-Based Compensation” ~~Loss~~(“SFAS 123”) ~~Per~~requires ~~Common~~that ~~Share~~companies either recognize compensation expense for grants of stock, stock options, and other equity instruments based on fair value, or provide pro forma disclosure of net income or loss and earnings or loss per share in the notes to the financial statements. The Company follows the disclosure provisions of SFAS 123 and applies APB Opinion 25 and related interpretations in accounting for its employee plans. Accordingly, no compensation cost has been recognized for its stock option plans since all options issued were for a fixed number of shares and had fixed exercise prices equal to the fair market value of the common stock on the grant date. The effects of applying SFAS 123 in this pro forma disclosure are not likely to be representative of the effects on reported income or loss for future years. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates as calculated in accordance with SFAS 123, the Company’s net loss and loss per share for the three months ended June 30, 2005.would have been increased to the pro forma amounts indicated below:

Basic earnings/loss per common share is computed by dividing net income/loss by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income by the sum of the weighted average number of common shares outstanding for the period plus all potentially dilutive securities, such as stock options.

	Three months ended June 30, 2005
Net loss:
As reported	$	1,093,286
Stock-based compensation included in reported net loss, net of related tax	—
Pro forma employee stock compensation expense	4,286
Pro forma net loss	$	1,097,572
Net loss per share—basic and diluted
As reported	$	0.19
Pro forma	0.19

During the three month periods ended March 31, 2005 and 2004 options to purchase 28,375 and 129,625 shares of common stock, respectively, were not included in the computation of diluted net loss per share since their inclusion would be antidilutive as a result of the net losses incurred.

~~4. Capitalized~~The fair value of each ~~acquisition~~stock ~~costs~~option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

The Company has incurred acquisition costs related to the Highbury House transaction (see note 6) of $779,469 as of March 31, 2005, which is classified as a current asset on the Company’s balance sheet as of March 31, 2005. These costs relate primarily to legal costs of approximately $700,000 and financial due diligence costs of approximately $80,000. As of March 31, 2005, $17,000 of these costs have been paid and $763,000 remain accrued.

	2005
Expected Life	5 years
Expected Volatility	50	%
Dividend Yield	0	%
Weighted Average Risk-free Interest Rate	6.0	%

5During the three month period ending June 30, 2005, the Company granted 22,500 stock options to a director of the Company at the current fair market value on the date of the grant. ~~New~~ Those options vest annually over ~~Accounting~~a ~~Pronouncements~~five year period.

~~In December 2004, the FASB revised SFAS No~~4. ~~123~~ Acquisition ~~(“SFAS No. 123(R)”). SFAS No. 123(R), Share-Based Payment, requires all share-based payments to employees, including grants~~ of ~~employee~~Nexus ~~stock~~Media options, to be recognized in the financial statements based on their fair values. Pro forma disclosure is no longer an alternative to financial statement recognition. SFAS No. 123(R) is effective for periods beginning after December 15, 2005. We are still evaluating the transition provisions allowed by SFAS No. 123 (R) and will adopt it in the first quarter of 2006. The financial statement impact is not expected to be materially different from that shown in the existing pro forma disclosure required under the original SFAS No. 123. The issuance of additional stock options in the future will cause SFAS 123(R) to have a greater impact on our financial statements.Communications

~~6. Subsequent~~As discussed in Note 1, ~~events~~on April 1, 2005 the Company acquired Nexus Media Communications from Highbury House.

On April 1, 2005, the Company completed a share purchase agreement to acquire the business to business publishing division (“Business”) of Highbury House Communications plc (“Highbury House”), a company organized under the laws of the United Kingdom. The ~~purchase~~preliminary purchase price ofallocation ~~GBP 12.5 million (approximately $23.395 million)~~ is ~~subject to a post-closing adjustment based on the actual working capital of the Business on the date of the closing. At closing, Ergo paid Highbury House GBP 11.459 million (~~approximately ~~$21.555~~as million), which represents the estimated amount of the final purchase price for the business after such adjustment. Ergo funded the acquisition with its own cash and cash equivalents. The Business, comprising of eight wholly-owned subsidiaries of Highbury House, provides information across a diverse range of sectors including printed and web-based magazines, data services and directories, exhibitions, conferences and award ceremonies. The Company has capitalized approximately $780,000 for direct costs related to the acquisition. The Company expects to complete the purchase accounting for this acquisition, including an independent valuation of the assets and liabilities acquired, sometime in the second quarter.follows:

Description	April 1, 2005
Assets:
Trade receivables	$	5,028,628
Inventory	691,129
Other current assets	3,158,837
Property and equipment	4,196,130
Goodwill	11,354,786
Trademarks and intangible assets	7,149,215
Total assets acquired	$	31,578,725
Liabilities:
Accounts payable	$	1,723,615
Deferred revenue and accrued expenses	8,532,239
Total liabilities	10,255,854
Net assets acquired	$	21,322,871

Represented by:
Cash paid at closing	$	21,555,267
Acquisition costs	640,604
Working capital adjustment to be refunded	(873,000		)
	$	21,322,871

The unaudited pro forma financial information in the table below summarizes the combined results of Nexus Media and Ergo for the six month period ended June 30, 2005 and the three and six month periods ended June 30, 2004 as though the companies had been combined as of the beginning of January 2004. The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each period, or that may result in the future.

	Six months ended June 30, 2005			Three months ended June 30, 2004		Six months ended June 30, 2004

Revenue	$	14,987,972		$	9,196,130	$	16,868,601
Net (loss) income	(2,151,534		)	456,236		(192,778		)
(Loss) earnings per common share	$	(0.37	)	$	0.08	$	(0.03	)

5. Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents at June 30, 2005 and December 31, 2004 were comprised of amounts held in cash and money market accounts.

6. Non cash transactions

During the three months ended March 31, 2005, Nexus Media entities declared two dividends totaling £14,920,567 (approx. $28,216,000). The balance with Highbury House group companies as at March 31, 2005, including this amount, was settled as part of the acquisition by Ergo.

In the three months ended March 31, 2005, Nexus Media made a profit of £4,564,475 on the sale by a Nexus Media entity of Highbury Nexus Special Interests Limited. This has been accounted for as a capital contribution through Additional Paid In Capital and the resulting balance with Highbury House was also settled on the acquisition.

7. Net Loss Per Common Share

During the three months ended June 30, 2005, options to purchase 50,875 shares of common stock were not included in the computation of diluted net loss per share since their inclusion would be antidilutive as a result of the net loss incurred. The exercise price range for the excluded 50,875 shares was $1.56 - $13.42.

Earnings/loss per share is not calculated for the predecessor periods since the predecessor did not comprise a legal group but was part of a larger entity, Highbury House, with no outstanding shares of its own on which EPS could be calculated. Furthermore the acquisition was financed by cash rather than the issuance of common shares.

8. Comprehensive (loss) income:

The following table shows the computation of comprehensive (loss) income:

				Predecessor
	Ergo			Nexus Media			Nexus Media			Nexus Media
	Three months ended June 30, 2005			Three months ended March 31, 2005			Three months ended June 30, 2004			Six months ended June 30, 2004
Net (loss) income	$	(1,093,286	)	$	(1,014,829	)	$	632,574		$	275,591
Other comprehensive (loss) income:
Foreign currency translation adjustments	(1,054,335		)	(358,920		)	(605,759		)	(586,883		)
Total comprehensive (loss) income	$	(2,147,621	)	$	(1,373,749	)	$	26,815		$	311,292

9. Income taxes

The provision for taxes based on income for the three months ended June 30, 2005, the three months ended March, 31, 2005 and the three and six months ended June 30, 2004 was computed in accordance with Interpretation No. 18 of Accounting Principles Board Opinion No. 28 on reporting taxes for interim periods and was based on management’s expectation of an effective tax rate of approximately 25% for the period ending December 31, 2005.

Income tax expense was $456,102 in the three months ended June 30, 2005 as the deferred tax asset in Nexus Media that was recorded as of March 31, 2005 was provided against. This resulted from the issuance of unsecured 10% fixed rate loan notes of Nexus Holdings Limited to Ergo of £10 million post acquisition. As a result of the interest on the notes, the recovery of the asset is no longer estimated to be more likely than not.

10. Recently Issued But Not Yet Adopted Accounting Pronouncements

In December 2004, the FASB revised SFAS No. 123 (“SFAS No. 123(R)”). SFAS No. 123(R), Share-Based Payment, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Pro forma disclosure is no longer an alternative to financial statement recognition. SFAS No. 123(R) is effective for periods beginning after December 15, 2005. The Company is still evaluating the transition provisions allowed by SFAS No. 123 (R) and will adopt it in the first quarter of 2006. The financial statement impact is not expected to be materially different from that shown in the existing pro forma disclosure required under the original SFAS No. 123. The issuance of additional stock options in the future will cause SFAS 123(R) to have a greater impact on our financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~This~~Management’s discussion and ~~contains~~analysis ~~forward-looking~~of ~~statements.~~financial ~~Forward-looking statements~~condition ~~reflect~~and ~~Ergo’s~~results ~~current~~of ~~views~~operations ~~with~~should ~~respect~~be toread ~~future~~in conjunction ~~events. Actual~~with ~~results~~the ~~may~~historical ~~vary~~financial ~~materially~~statements and footnotes of the ~~adversely~~Company, ~~from~~included ~~those~~in ~~anticipated~~its Annual Report on Form 10-K for the year ended December 31, ~~believed~~2004, ~~assumed~~and of Nexus Media, ~~estimated~~included orin ~~otherwise~~the Company’s Current Report on Form ~~indicated~~8-K/A filed on June 17, 2005. ~~Important~~The results ~~factors~~of ~~that~~operations ~~could cause~~may ~~actual~~change materially from the historical results toof operations ~~differ~~reflected ~~materially~~in ~~include,~~the ~~without~~historical ~~limitation:~~financial statements of Ergo or Nexus Media.

• As we acquire the assets of Highbury House’s business to business division, there can be no assurance of the Business’ future success. Particular risk factors include, but are not limited to:

Ergo is relying on the existing key personnel of the acquired company to continue to run the business.

The existing management of Ergo has no expertise in the publishing industry.

The acquired company’s operating units are located outside of the United States.

Current financial results of the acquired company are not indicative of future results.

The market for the acquired company’s products and services can be competitive depending on the particular sector being serviced; and

• the transfer restrictions implemented on the Company’s common stock set forth in the Certificate of Incorporation may delay or prevent takeover bids by third parties and may delay or frustrate any attempt by the Company’s stockholders to replace or remove the current management; and

• the Company believes that it has qualified for exclusions from the definition of “investment company”‘ under the Investment Company Act of 1940 at all relevant times since our incorporation; however, if the Securities and Exchange Commission takes a contrary position and prevails, the Company would be subject to significant restrictions on our business and on its ability to acquire one or more established businesses.

Overview

OnErgo ~~February 8,~~Science ~~2005,~~ Corporation (the “Company” ~~entered~~or ~~into~~“Ergo”) ~~a share~~acquired ~~purchase~~(the ~~agreement~~“Acquisition”) ~~to acquire~~ the business to business ~~publishing~~ publishing division (“~~Business~~Bcom”) or “Nexus Media Communications” or “Nexus Media”) of Highbury House Communications plc (“Highbury House”), a company organized under the laws of the United Kingdom. Onon April 1, 2005,. itThe ~~completed the acquisition for a~~ purchase price of GBP 12.5 million (approximately $23.395 million)~~. The~~ ~~purchase price~~was is subject to a post-closing adjustment based on the actual working capital of ~~the~~Nexus ~~Business~~Media on the date of the closing. At closing, ~~Ergo~~the Company paid Highbury House GBP 11.459 million (approximately $21.555 million), which represented ~~represents~~ the estimated amount of the final purchase price for ~~the~~Nexus ~~business~~ Media after such adjustment. ~~Ergo~~ ~~funded~~The working capital adjustment was determined to be GBP 464,000 (approximately $873,000) favorable to the Company with this additional amount to be received sometime in the third quarter. As of June 30, 2005, the Company had paid a total $22,032,581 related to the Acquisition, which includes $477,000 in capitalized acquisition costs. The Acquisition was funded by the Company with its own cash and cash equivalents. ~~The~~Nexus ~~Business~~Media, comprising of eight wholly-owned ~~subsidiaries~~ ~~of Highbury House~~subsidiaries, provides information across a diverse range of sectors including printed and web-based magazines, data services and directories, staging exhibitions, conferences and award ceremonies. ~~The business currently~~

9Nexus Media’s business includes: 13 trade names (including: Checkout; Electrical Times; Independent Grocer; The Motor Ship; World Travel Guide; and Motor Trader); 150 domain names (including: columbusguides.com; groweroftheyear.com; harpers-wine.com; motorship.com; motortrader.com; travel-guide.com; and worldfish.com); approximately 45 magazine titles (including: Motor Trader; World Fishing Magazine; Export Times; Checkout; World Travel Guide; Television World; and Electronics World); and approximately 35 exhibitions (including: European Hotel Design Awards; The International Wine & Spirit Competition; The Retail Industry Awards; Quality Food and Drinks Awards; and Europe Power Conference and Exhibition).

~~operates~~At Ergo’s Annual Meeting of Stockholders held on inOctober ~~four~~15, ~~divisions~~2001, ~~which~~stockholders ~~include~~approved the imposition of transfer restrictions on its common stock (1the “Transfer Restrictions”) ~~Food~~, ~~Drink &~~which ~~Retail,~~are ~~(2) Transport~~contained in ~~and~~Article ~~Industry,~~XII ~~(3) Defense~~of ~~and~~the ~~Communications~~Company’s ~~and~~Certificate of Incorporation (4the “Certificate”) ~~Travel~~. The Transfer ~~business~~Restrictions ~~operates~~were ~~out~~implemented ofon aOctober 2819,~~000~~ ~~square~~2001 ~~foot~~to ~~facility~~preserve ~~that~~certain ~~it owns in Swanley,~~valuable ~~Kent~~tax benefits (~~United~~the ~~Kingdom~~“Tax Benefits”) ~~with~~to ~~approximately~~which ~~240~~the ~~employees~~Company is entitled.

~~According~~Effective toMay ~~its~~18, ~~2003~~2005, the ~~Annual~~board ~~Report,~~of ~~Highbury~~directors ~~House~~(the “isBoard”) of the Company, acting by unanimous aconsent ~~leading~~(the ~~international~~“Unanimous ~~print~~Consent”), and ~~online~~taking ~~publisher~~into ofconsideration ~~over~~that ~~200~~the ~~consumer,~~Tax ~~business~~Benefits towill ~~business~~not ~~and~~begin ~~client~~to ~~magazines,~~expire asuntil ~~well~~2008, asthat anthe ~~organizer~~Company’s ofability ~~events~~to ~~around~~retain the ~~globe.”~~Tax ~~Highbury~~Benefits ~~House~~is ~~Communications~~subject ~~plc~~to islimitations ~~listed~~resulting onfrom, ~~the~~among ~~FTSE~~other ~~Index.~~things, ~~The~~an ~~business~~ownership ~~acquired~~change ~~includes:~~(an 13“Ownership ~~trade~~Change”) ~~names~~as ~~(including:~~defined ~~Checkout;~~in Sections 382 ~~Electrical~~and ~~Times;~~383 ~~Independent~~of ~~Grocer;~~the ~~The~~Internal ~~Motor~~Revenue ~~Ship;~~Code ~~World~~of ~~Travel~~1986, ~~Guide;~~as ~~and~~amended from time to time, or ~~Motor~~any ~~Trader~~successor statute (collectively, the “Code”);, ~~150~~that ~~domain~~the ~~names~~value ~~(including:~~of ~~columbusguides.com;~~the Tax ~~groweroftheyear.com;~~Benefits ~~harpers-wine.com;~~could ~~motorship.com;~~be ~~motortrader.com; travel-guide.com;~~reduced ~~and~~if ~~worldfish.com);~~an ~~approximately~~Ownership 40Change ~~magazine~~occurs, ~~titles~~and that the Transfer ~~(including:~~Restrictions ~~Motor~~likely ~~Trader;~~decrease ~~World~~the ~~Fishing~~possibility ~~Magazine;~~of ~~Export~~an ~~Times;~~Ownership ~~Checkout;~~Change, ~~World~~determined ~~Travel~~(the ~~Guide;~~“Determination”) ~~Television~~that ~~World;~~modifying ~~and~~the ~~Electronics~~definition ~~World);~~of ~~and~~“Expiration ~~approximately~~Date” 30set ~~exhibitions~~forth in Article XII.(~~including:~~1) ~~European~~of ~~Hotel~~the ~~Design~~Certificate ~~Awards;~~and ~~The~~extending ~~International~~that ~~Wine &~~date through ~~Spirit~~2007 ~~Competition;~~was ~~The~~in ~~Retail~~the ~~Industry~~best ~~Awards;~~interests ~~Quality~~of ~~Food~~the Company and ~~Drinks~~both ~~Awards;~~ reasonably necessary and desirable ~~Europe~~to ~~Power~~preserve ~~Conference~~the ~~and~~Tax ~~Exhibition)~~Benefits.

~~From~~As ~~November 2003~~a result of the ~~until~~Determination, ~~February 2005~~the Board modified the ~~Company~~text ~~had~~of ~~been~~Article ~~reviewing~~XII. ~~and~~(1) ~~evaluating~~of the ~~potential~~Certificate ~~acquisitions.~~to read as follows:

Onthe ~~November 24, 2003 we sold all of our~~following ~~scientific~~restrictions ~~and~~shall ~~research~~apply ~~assets~~until ~~and~~the ~~certain~~earlier ~~other~~of ~~intellectual~~(x) ~~property~~the ~~assets to~~day ~~Pliva~~after ~~d.d., a company organized under~~ the ~~laws~~sixth ~~of Croatia~~ (~~“Pliva”~~6th). anniversary ~~At the time~~ of the ~~sale,~~effective wetime ~~received~~of ~~$5,498,000 in cash. Upon~~ the merger ~~occurrence~~ of ~~certain~~ ~~events outlined in~~ the ~~asset~~Corporation’s ~~purchase~~parent ~~agreement~~corporation, wea ~~would~~Delaware ~~have received an additional $500~~corporation,~~000.~~ ~~In accordance~~ with ~~the asset purchase agreement, Pliva~~ ~~had~~and ~~one~~into ~~year from~~ the ~~closing~~Corporation ~~date~~pursuant to ~~obtain~~Section ~~the~~253 ~~right~~of tothe ~~certain~~Delaware ~~patents from~~General ~~Massachusetts~~Corporation ~~General~~Law ~~Hospital~~ (~~“MGH~~the ~~Patents~~“Merger”). (y) ~~Pliva was not able to obtain~~ the ~~right~~repeal toof ~~the~~Section ~~MGH~~382 ~~Patents~~of ~~and~~the ~~therefore~~Code ~~they~~if ~~shall retain~~ the ~~additional $500,000~~board ~~and~~of ~~shall~~directors ~~have~~determines ~~no further obligation to pay~~ that ~~amount~~the restrictions toin ~~us.~~this ~~In addition,~~Article ~~Pliva~~XII ~~has~~are ~~assumed~~no ~~our~~longer ~~future~~necessary ~~obligations~~for ~~under~~ the ~~LSU Royalty~~preservation ~~agreement. Also as part~~ of the ~~agreement, Pliva~~Tax ~~has agreed to make payments to one of our wholly-owned subsidiaries~~Benefits, ~~Ergo Texas Holdings, Inc., to cover certain payments required to be made in the event that Ergoset® or another specified drug is approved by the Food~~ and ~~Drug Administration.~~(z)

At our Annual Meeting of Stockholders held on October 15, 2001, stockholders approved the imposition of transfer restrictions on our common stock (the “Transfer Restrictions”), which are contained in Article XII of the Company’s Certificate of Incorporation (the “Certificate”). The Transfer Restrictions were implemented on October 19, 2001 to preserve certain valuable tax benefits (the “Tax Benefits”) to which the Company is entitled.

Effective May 11, 2005, the board of directors (the “Board”) of the Company, acting by unanimous consent ( the “Unanimous Consent”), and taking into consideration that the Tax Benefits will not begin to expire until 2008, that the Company’s ability to retain the Tax Benefits is subject to limitations resulting from, among other things, an ownership change (an “Ownership Change”) as defined in Sections 382 and 383 of the Internal Revenue Code of 1986, as amended from time to time, or any successor statute (collectively, the “Code”), that the value of the Tax Benefits could be reduced if an Ownership Change occurs, and that the Transfer Restrictions likely decrease the possibility of an Ownership Change, determined (the “Determination”) that modifying the definition of “Expiration Date” set forth in Article XII.(1) of the Certificate and extending that date through 2007 was in the best interests of the Company and both reasonably necessary and desirable to preserve the Tax Benefits.

As a result of the Determination, the Board modified the text of Article XII.(1) of the Certificate to read as follows:

the following restrictions shall apply until the earlier of (x) the day after the sixth (6th) anniversary of the effective time of the merger of the Corporation's parent corporation, a Delaware corporation, with and into the Corporation pursuant to Section 253 of the Delaware General Corporation Law (the “Merger”), (y) the repeal of Sections 382 of the Code if the board of directors determines that the restrictions in this Article XII are no longer necessary for the preservation of the Tax Benefits, and (z) the beginning of a taxable year of the Corporation to which the board of directors determines that no Tax Benefits may be carried forward, unless the board of directors shall fix an earlier or later date in accordance with Section 5 of this Article XII (the date on which the restrictions of this Article XII expire hereunder is sometimes referred to herein as the “Expiration Date.”)

The day after the sixth anniversary of the effective time of the Merger is October 20, 2007. Additionally, the Board extended the Expiration Date until October 16, 2007.

In March 2001, we decided that the next phase of the development of ERGOSET® would be better undertaken by a company that has more experience with human drug development and more resources for regulatory approval and marketing than we do. From our incorporation through March 2001, we were engaged in the development of ERGOSET® tablets for the treatment of type 2 diabetes.

From our inception through 2004, the Company has been unprofitable every year except 2003. We were profitable in 2003 solely because of the sale of the Company’s science assets to Pliva.

the beginning of a taxable year of the Corporation to which the board of directors determines that no Tax Benefits may be carried forward, unless the board of directors shall fix an earlier or later date in accordance with Section 5 of this Article XII (the date on which the restrictions of this Article XII expire hereunder is sometimes referred to herein as the “Expiration Date.”)

The day after the sixth anniversary of the effective date of the merger is October 20, 2007. Additionally, the Board extended the Expiration Date until October 20, 2007.

Risk Factors

The market for Nexus Media’s products and services is competitive.

The competition for Nexus Media’s products and services is highly fragmented by product offering and by geography. On a global level, larger international firms operate in many geographic markets and have broad product offerings in trade shows, conferences, publications and direct marketing products and other.

Within each particular industry sector, Nexus Media also competes with a large number of small to medium-sized firms. While most small to medium-sized firms operate in a single geographic market or industry sector, in some cases, its competitors operate in several geographic markets and/or industry sectors. Its trade shows and conferences compete with trade associations and, in several markets, with exposition hall owners and operators. Its publications typically have between two and five direct competitors that target the same industry sector, and it also has many indirect competitors that define niche markets differently than it does and thus may provide alternatives for readers and/or advertisers.

Nexus Media has not previously acted as a stand-alone company.

Nexus Media has no history of operating as a stand-alone company, and it may be unable to make the changes necessary to operate as a stand-alone company, or it may incur greater costs as a stand-alone company that may cause its profitability to decline. Nexus Media has been operated by Highbury House as a division of its broader publishing organization rather than as a separate stand-alone company. Highbury House assisted Nexus Media by performing various corporate functions, including public relations, employee relations, financing and legal and tax functions. Following the Acquisition, Highbury House has no obligation to provide these functions to Nexus Media. If Nexus Media does not have in place its own systems and business functions or if it does not have agreements with other providers of these services, Nexus Media may not be able to effectively operate its business and its profitability may decline.

Trade Show exhibit space and ad pages could decline as a result of an economic slowdown in the United Kingdom, future terrorist attacks, or geopolitical concern.

Nexus Media’s customers typically reduce their marketing and advertising budgets during a general economic downturn or a recession in the United Kingdom or in any other market where Nexus Media conducts a significant amount of business. The longer a recession or economic downturn continues the more likely it becomes that Nexus Media’s customers may significantly reduce their marketing and advertising budgets. Any material decrease in marketing budgets could reduce the demand for exhibition space and also reduce attendance at Nexus Media’s trade shows and conferences. In addition, any material decrease in advertising budgets could reduce the demand for advertising space in Nexus Media’s publications. As a result, Nexus Media’s revenue and its cash flow from operations could decrease significantly. In addition, Nexus Media’s integrated marketing strategy could be materially adversely affected if advertising revenue cannot support one or more of its important publications or if declines in its customers’ marketing and advertising budgets require it to discontinue one or more of its important trade shows or conferences.

Further terrorist attacks and continued geopolitical concern (including conflict in the Middle East) may significantly affect Nexus Media’s future results of operations or financial condition, whether as a result of (1) reduced attendance at, or curtailment or cancellation of, trade shows due to travel fears, (2) further reduction in economic activity and a related reduction in marketing expenditures on publications or trade shows, or (3) other circumstances that could result from these or subsequent attacks.

Nexus Media depends on securing desirable dates and locations for its trade shows and conferences, which it may not be able to secure.

The date and location of a trade show or a conference can impact Nexus Media profitability and prospects. The market for desirable dates and locations is highly competitive. If Nexus Media cannot secure desirable dates and locations for its trade shows and conferences, profitability and future prospects would suffer, and its financial condition and results of operations would be materially adversely affected. In general, Nexus Media maintains multi-year reservations for its trade shows and conferences. Consistent with industry practice, it does not pay for these reservations, and these reservations are not binding on the facility owners until Nexus Media executes a contract with the owner. Nexus Media typically signs contracts that guarantee the right to venues or dates for only one year. Therefore, multi-year reservations may not lead to binding contracts with facility owners. In addition, because trade shows and conferences are held on pre-scheduled dates at specific locations, the success of a particular trade show or conference depends upon events outside Nexus Media’s control, such as natural catastrophes, labor strikes and transportation shutdowns.

Nexus Media’s trade shows, conferences and publishing revenues vary due to the movement of annual events or publication mailing dates and the timing of its customers’ product launches.

Nexus Media’s trade shows, conferences and publishing revenues are seasonal, due primarily to the timing of its large trade shows and conferences and the mailing dates of its magazines and industry directories. Because event revenues are recognized when a particular event is held and publication revenues are recognized in the month publications are mailed, Nexus Media may also experience fluctuations in quarterly revenues based on the movement of annual events or mailing dates from one quarter to another.

In addition, Nexus Media’s trade show and conference revenues may fluctuate from period to period based on the spending patterns of its customers. Many of its large customers concentrate their trade show participation around major product launches. Because it cannot always know or predict when its large customers intend to launch new products, it is difficult to anticipate any related fluctuations in trade show and conference revenues.

Nexus Media depends in part on new product introductions, and the process of researching, developing, launching and establishing profitability for a new event or publication is inherently risky and costly.

Nexus Media’s success depends in part upon ability to monitor rapidly changing market trends and to adapt events and publications to meet the evolving needs of existing and emerging target audiences. Future success will depend in part on Nexus Media’s ability to continue to adapt existing events and publications and to offer new events and publications by addressing the needs of specific audience groups within its target markets. The process of researching, developing, launching and establishing profitability for a new event or publication is inherently risky and costly. Nexus Media generally incurs initial operating losses when it introduces new events and publications. Efforts to introduce new events or publications may not ultimately be successful or profitable. In addition, costs related to the development of new events and publications are accounted for as expenses, so year-to-year results may be materially adversely affected by the number and timing of new product launches.

Nexus Media’s overall operations may be adversely affected by risks associated with international operations.

Nexus Media’s primary operations are in the United Kingdom. The following risks in international markets could have a material adverse effect on Nexus Media’s future international operations and, consequently, on its business, results of operations and financial condition:

• general economic and political uncertainties and potential for social unrest;

• limitations on our ability to enforce legal rights and remedies;

• state-imposed restrictions on the repatriation of funds; and

• potentially adverse tax consequences.

Reliance on principal vendors could adversely affect business.

Nexus Media relies on principal vendors (principally paper and print vendors and distributors) and their ability or willingness to sell products to it on favorable price and other terms. Many factors outside of Nexus Media’s control may harm these relationships and the ability or willingness of these vendors to sell these products to it on such terms. If any of its principal vendors discontinues or temporarily terminates its services and it is unable to find adequate alternatives, Nexus Media may experience increased prices, interruptions and delays in services. These factors could adversely affect business.

Increases in paper or postage costs could cause Nexus Media’s expenses to increase and may adversely affect business.

Paper and postage are necessary expenses relating to print products and magazine distribution. Significant increases in paper prices or in postage prices may have an adverse effect on business. Nexus Media does not use forward contracts, and all of its paper supply vendor arrangements provide for price adjustments to reflect prevailing market prices. If Nexus Media cannot pass significant increases in paper and postage costs through to its customers, its financial condition and results of operations could be materially adversely affected.

Nexus Media may not be able to protect its intellectual property.

Nexus Media relies on copyright and trademark rights to protect its publishing products. Effective trademark and copyright protection may be unavailable or limited, or Nexus Media may not have applied for such protection in the United States or abroad. In addition, Nexus Media has been, and may in the future be, notified of claims that its publishing products may infringe trademarks, copyrights, patents and/or other intellectual property rights of others. Such claims, including any related litigation, could result in significant expense to Nexus Media and adversely affect its cash flow, whether or not such litigation is resolved in its favor.

Results of Operations

Prior to the acquisition of Nexus Media on April 1, 2005, the Company had no trading operations, having sold its previous operations in November 2003. As a result, Nexus Media is considered to be the predecessor. To assist in the understanding of the results of operations of the Company, management have presented supplemental historical results of Nexus Media. For the purpose of management’s discussion and analysis of financial condition and results of operations, management have combined the ~~Three~~Company’s ~~Months~~results ~~Ended~~for the three months ended June 30, 2005 with that of Nexus Media for the three months ended March 31, 2005 and ~~2004~~compared that to the results of Nexus Media for the six months ended June 30, 2005. The table is found preceding the discussion of the results of operations for the six months ended June 30, 2005. Management believes that this provides the most meaningful analysis of the Company’s results for the six months ended June 30, 2005.

For the Three Months Ended June 30, 2005 and 2004

Revenue. Revenue decreased to $8,403,095 from $9,196,130 for the three month period ended June 30, 2005 compared with the same period in 2004. The decrease of approximately $800,000, which is substantially all volume-related rather than price-related, was primarily the result of declines in both advertising revenue of $1,000,000 and subscription revenue of $300,000, offset by increases principally in event revenue of $500,000. The Nexus Media Communications revenue is approximately 52% from advertising in 2004. Management has been transitioning the core business revenue towards revenue from events, sponsorships and on-line advertising. Management has not yet increased revenues enough from its non-traditional areas to cover the decreases it has sustained from its traditional advertising and circulation revenue bases. This trend is part of the current general market conditions in the business to business media sector.

Gross profit decreased to 30% from 34% for the three months period ended June 30, 2005 compared with the same period in 2004. The decrease is due to new events which traditionally have resulted in smaller margins during their first year. Gross profit typically increases during succeeding years. Gross profit can be volatile during the year as the timing and frequency of events can change and vary quarter by quarter.

General and Administrative Expenses. General and administrative expenses consist primarily of compensation for personnel, professional services, which include consultants, legal fees, accounting, audit and tax fees, and administrative expenses associated with operating as a public company.

General ~~and~~ and administrative expenses ~~decreased~~increased ~~from~~to $~~350~~3,~~163~~124,413 tofrom $~~180~~2,~~049~~113,186 for the three month ~~periods~~period ended ~~March~~June 3130, ~~2004 and~~ 2005, ~~respectively.~~compared with ~~The~~the ~~decrease~~same period in 2004. The ~~2005~~increase of approximately $~~170~~1,000,000 ~~was~~represents ~~primarily~~increased ~~due~~costs toas ~~decreases~~a inresult ~~legal costs~~ of ~~$151,000,~~the ~~insurance~~separation ~~expenses~~ of ~~$9,000~~Nexus ~~and~~Media ~~travel~~from ofits ~~$10,000.~~former ~~The~~parent ~~decrease~~company, inHighbury House ~~legal~~and ~~fees~~increased iscosts due to afulfilling ~~reduction~~requirements innecessary ~~activity~~as ~~incurred~~a byresult ~~the Company in~~of ~~non-acquisition~~being ~~related~~acquired ~~areas.~~by ~~The~~a ~~decrease~~US inpublic ~~insurance~~company ~~expense~~ of approximately $9930,000 isand expenses ~~related~~from toErgo ~~reductions~~Science ontotaling ~~premiums~~$176,000 ~~for~~offset ~~the~~by ~~Company’s~~$170,000 ~~insurance~~of ~~policies.~~costs ~~The~~savings, ~~decrease~~primarily inrecharges ~~travel~~from ~~costs~~Highbury ~~reflects~~House ~~a general decrease~~ in ~~travel~~2004.

~~Interest income~~Net ~~increased~~(loss) ~~from~~income decreased to ($581,~~132~~093,286) tofrom $~~136~~632,~~630~~574 for the three month periods ended ~~March~~June 3130, ~~2004~~2005 and ~~2005~~2004, respectively. The increase isin ~~due~~net ~~primarily~~loss of approximately 1,725,860 is attributable to adecreases in revenue as well as increases in general and ~~increase~~administrative expenses. Income tax expense was $456,102 in the quarter as the deferred tax asset in Nexus Media was provided against since, following the issuing of ~~market~~unsecured ~~interest~~10% ~~rates~~Fixed Rate loan notes of Nexus Holdings Limited to Ergo of £10,100,000, the recovery of this asset is no longer more likely than not.

Net loss decreased from $292,031 to $43,419 for the three month periods ended March 31, 2004 and 2005, respectively. The decrease in net loss is due to a decrease in general and administrative costs incurred by the Company and an increase in interest income.13

For the Six Months Ended June 30, 2005 and 2004

Statement of Operations (Summary):

	Ergo Consolidated			Predecessor Nexus Media
	Three months ended June 30, 2005			Three months ended March 31, 2005			Combined Total

Net revenues	$	8,403,095		$	6,584,877		$	14,987,972
Cost of revenues	5,892,227			6,048,974			11,941,201
Gross profit	2,510,868			535,903			3,046,771

Operating expenses	3,176,380			1,701,342			4,877,722

Interest income	28,328			69,971			98,299

Net income (loss) before taxes	(637,184		)	(1,095,468		)	(1,732,652		)
Income tax expense (benefit)	456,102			(80,639		)	375,463
Net income (loss)	$	(1,093,286	)	$	(1,014,829	)	$	(2,108,115	)

Revenue. Revenue decreased to $14,987,972 from $16,868,601 for the six month period ended June 30, 2005 compared with the same period in 2004. The decrease of approximately $1,880,000, which is substantially all volume-related rather than price-related, was primarily the result of declines in both advertising revenue of $2,100,000 and subscription revenue of $500,000, offset by increases in event revenue of $720,000. The Nexus Media Communications revenue is approximately 52% from advertising in 2004. Management has been transitioning the core business revenue towards revenue from events, sponsorships and on-line advertising. Management has not yet increased revenues enough from its non-traditional areas to cover the decreases it has sustained from its traditional advertising and subscription revenue bases. This trend is part of the current general market conditions in the business to business media sector.

Gross profit decreased to 20% from 27% for the six months period ended June 30, 2005 compared with the same period in 2004. The decrease is due to new events which traditionally have resulted in smaller margins during their first year. Gross profit typically increases during subsequent years of an event.

General and administrative expenses increased to $4,877,722 from $4,059,461 for the six month period ended June 30, 2005 compared with the same period in 2004. The increase of approximately $820,000 represents increased costs as a result of the separation of Nexus Media from its former parent company, Highbury House and increased costs due to increased compliance requirements necessary as a result of being acquired by a US public company.

Net (loss) income decreased to $(2,108,115) from $275,591 for the six month period ended June 30, 2005 compared with the same period in 2004. The increase in net loss of approximately $2,383,706 is attributable to decreases in revenue, decreases in gross profit and increases in general and administrative expenses. Income tax expense was $456,102 in the quarter as the deferred tax asset in Nexus Media was provided against since, following the issuing of unsecured 10% Fixed Rate loan notes of Nexus Holdings Limited to Ergo of £10,100,000 (approximately $18,109,000), the recovery of this asset is no longer more likely than not.

Liquidity and Capital Resources

For the reasons outlined above, for the purpose of management’s discussion and analysis of liquidity and capital resources, in the table below management have combined the Company’s cash flows for the three months ended June 30, 2005 with that of Nexus Media for the three months ended March 31, 2005 and compared that to the cash flows of Nexus Media for the six months ended June 30, 2004. Management believes that this provides the most meaningful analysis of the Company’s cash flows for the six months ended June 30, 2005.

Statement of Cash Flows (Summary):

	Ergo Consolidated Three months ended June 30, 2005			Predecessor
	Ergo Consolidated Three months ended June 30, 2005			Nexus Media Three months ended March 31, 2005			Combined Total

Net cash provided by (used in) operating activities	$	2,296,849		$	(1,575,574	)	$	721,275
Net cash (used in) investing activities	(22,037,278		)	(112,438		)	(22,149,716		)
Net decrease in cash and cash equivalents	(19,740,429		)	(1,688,012		)	(21,428,441		)
Effect of exchange rates on cash and cash equivalents	(81,631		)	(22,223		)	(103,854		)

Cash and cash equivalents at beginning of period	26,136,046			1,710,235			27,846,281
Cash and cash equivalents at beginning of period	$	6,313,986		—			$	6,313,986

Resources

~~Although~~On ~~not occurring during the three months ended March 31, 2005, as part of the acquisition of the business to business division of Highbury House on~~ April 1, 2005, the Company used $21,555,267 of its own cash to complete the transaction of acquiring Nexus Media. The ~~Company~~ ~~has~~ Company also incurred approximately $~~800~~640,000 of transaction costs ~~which~~related ~~are~~to the ~~expected~~acquisition, toof bewhich $477,000 was paid inas ~~the~~of ~~second~~June 30, ~~quarter~~2005. As of ~~April~~ June 30, 2005, the Company had $46,~~525~~313,~~000~~986 of cash and cash equivalents.

~~Since~~The ~~the~~ Company’s UK ~~inception~~subsidiary, ~~its~~Nexus ~~primary~~Media ~~source~~Communications ofLimited ~~cash~~ has ~~been~~a ~~from~~net ~~financing~~overdraft ~~activities,~~facility ~~which~~of ~~have~~£2 ~~consisted~~million of(approximately ~~private~~$3.8 ~~placements~~million) ofbearing ~~equity~~interest ~~securities,~~at ~~two~~2% ~~public offerings,~~above ~~and~~base rate, the ~~sale~~term of ~~common~~which ~~stock~~is in364 ~~conjunction~~days ~~with~~from ~~the~~March 29, ~~signing~~2005 ofalthough the facility ~~Joint~~will ~~Collaboration~~remain ~~Agreement~~on ~~with~~demand. The ~~Johnson~~amount drawn-down ~~and Johnson~~ on ~~February 23, 1998.~~the ~~The~~facility ~~Joint~~is ~~Collaboration~~required ~~Agreement~~to ~~was~~be ~~terminated~~covered by ~~Johnson~~good ~~and~~trade ~~Johnson~~debtors of onless ~~January 3,~~than ~~1999~~90 days at all times. There ~~Private~~is no ~~placements~~outstanding ofbalance ~~equity~~drawn ~~securities~~down ~~provided~~on ~~us with~~this ~~aggregate~~facility ~~proceeds~~as of ~~$42~~June 30,~~999,000~~ ~~through 1998~~2005.

OnCash ~~November 24,~~provided ~~2003~~by we(used ~~sold~~in) operating ~~all~~activities ofwas ~~our scientific~~$2,296,849 ~~and~~for ~~research~~the ~~assets~~three ~~and~~month ~~certain~~period ~~other~~ended ~~intellectual~~June 30, 2005 ~~property~~compared ~~assets~~ to ~~Pliva d.d.~~$(135,280) afor ~~company organized under~~ the ~~laws~~three-month ofperiod ~~Croatia~~ended ~~(“Pliva”)~~June 30, 2004. Working Atcapital ~~the time~~usage ofimproved ~~the~~in ~~sale,~~both we2004 ~~received~~and ~~$5,498,000~~2005 inas ~~cash.~~would ~~Upon~~be expected for the ~~occurrence~~cyclical nature of ~~certain~~ ~~events~~this ~~outlined~~business. Cash inflows increased in the ~~asset~~quarter ~~purchase~~as ~~agreement,~~a weresult ~~would~~of ~~have~~cash received in advance for the major events anthat ~~additional~~are ~~$500,000.~~scheduled Into ~~accordance~~occur ~~with~~in the ~~asset~~second ~~purchase~~half ~~agreement,~~of ~~Pliva had~~this ~~one~~fiscal year. ~~from~~In ~~the~~2004 this ~~closing~~favorable ~~date~~movement towas ~~obtain~~masked ~~the~~since ~~right~~working tocapital ~~certain~~was managed by Highbury House.

11Cash provided by (used in) operating activities was $721,275 for the six-month period ended June 30, 2005 compared to $(22,690) for the six-month period ended June 30, 2004. Working capital usage improved in both 2004 and 2005 as would be expected for the cyclical nature of this business. Cash inflows increased in the six month period as a result of cash received in advance for the major events that are scheduled to occur in the second half of this fiscal year. In 2004 this favorable movement was masked since working capital was managed by Highbury House.

~~patents from~~Net ~~Massachusetts~~cash ~~General~~used ~~Hospital~~in ~~(“MGH~~investing activities ~~Patents”). Pliva~~ was ~~not~~$22,149,716 ~~able~~constituting ~~to obtain~~ the ~~right to the MGH Patents and therefore they shall retain the additional~~ $~~500~~22,~~000 and shall have no further obligation to pay that amount to us. In addition~~032,581 ~~Pliva~~acquisition ~~has~~of ~~assumed our future obligations under~~ the ~~LSU Royalty~~ ~~agreement. Also~~Nexus asMedia ~~part~~business ofand ~~the agreement~~$117, ~~Pliva~~135 ~~has agreed to make payments to one~~ of ~~our~~capital ~~wholly-owned subsidiaries, Ergo Texas Holdings, Inc~~spend.~~, to cover certain payments required to be made in the event that Ergoset® or another specified drug is approved by the Food and Drug Administration.~~

~~Cash and~~The ~~cash~~Group’s ~~equivalents~~use ~~were~~of ~~$26,136,046~~cash has ~~and~~fluctuated ~~$26,453,190~~significantly atprincipally ~~March 31,~~due ~~2005 and~~to ~~December 31,~~the ~~2004,~~timings ~~respectively.~~ of events with ~~The~~revenue ~~overall~~being ~~decrease~~received in cash ~~and~~prior ~~cash~~to ~~equivalents~~related atcreditors ~~March 31,~~being ~~2005~~incurred or ~~was~~settled. It ~~due~~is toanticipated ~~cash~~that ~~payments~~this pattern ~~made~~may bycontinue ~~the~~in ~~Company during~~ the ~~ordinary~~foreseeable ~~course of business~~future.

Cash used in operating activities was $299,963 and $450,108 for the three-month periods ended March 31, 2005 and 2004, respectively. The decrease is cash used for operating activities was primarily due to decreased spending for legal fees of approximately $133,000.15

The Company made cash payments in the first quarter of the current fiscal year and the prior fiscal year in the amount of $65,000 and $85,000, respectively, for the annual premiums for its Directors and Officers insurance policy.

Cash used in investing activities was $17,181 for the three-month period ending March 31, 2005, which represents payments for acquisition costs related to Highbury House.

Our only source of cash in the three months ended March 31, 2005 was interest income of $136,630 generated by our investment of cash and cash equivalents in government obligations. This amount will decrease significantly in future periods since the Company used most of its existing cash to acquire the business to business division of Highbury House on April 1, 2005.

Our use of cash has fluctuated significantly from quarter to quarter and we anticipate that this pattern may continue in the foreseeable future.

Requirements

~~Although not occurring during the three months ended March 31, 2005, our primary use of cash in 2005 has been for the acquisition of the business to business division of Highbury House.~~ The Company~~’s cash~~ ~~position~~expects ~~after the acquisition was approximately $4.5 million prior to~~that ~~paying transaction costs, which are estimated to be approximately $800,000. Prior to 2005, our primary use of~~ cash ~~had~~generated ~~been~~from ~~in general and administrative expenses and in evaluating and implementing strategic alternatives. Prior to March 2001~~ our ~~primary~~newly ~~use~~acquired ~~of cash was in~~ operating ~~activities~~business towill fund ~~research~~our ~~and~~current ~~development,~~operations ~~including~~for ~~preclinical~~at ~~studies~~least ~~and~~the ~~clinical~~next ~~trials~~12 months. In ~~addition,~~the ~~we purchased~~event ~~1,335,722~~that ~~shares~~the ofCompany purchases ~~our~~an ~~common~~additional ~~stock on August 1~~business, ~~2003,~~the ~~from~~Company ~~our then-largest~~may ~~stockholder,~~require ~~Court~~additional ~~Square~~capital ~~Capital~~to complete ~~Limited,~~the ~~for $2,417,657~~acquisition.

WeThe ~~expect~~Company ~~that~~cannot ~~cash generated from our newly~~pay ~~acquired~~dividends ~~operating~~on ~~business will fund~~ our ~~current~~common ~~operations~~stock ~~for~~without atfirst ~~least~~obtaining the ~~next~~ 12written ~~months.~~consent In of the ~~event~~holders ~~that~~of ~~the~~a ~~Company~~majority ~~purchases~~of anour ~~additional~~outstanding ~~business, we~~series ~~may~~D ~~require~~exchangeable ~~additional capital to complete the acquisition~~preferred stock.

~~The~~Recently ~~Company’s~~Issued ~~cash~~But ~~balance~~Not ~~after the acquisition of~~Yet ~~the~~Adopted ~~business~~Accounting to business division of Highbury House was approximately $4.6 million. The cash balance will decrease by approximately $800,000 upon the payment of the transaction costs associated with this acquisition.Pronouncements

Depending on the decisions that are made, our capital requirements may exceed our current resources. In such event, we would have to seek additional debt or equity financing from private or public sources. To the extent we raise additional capital by issuing equity securities, ownership dilution to existing stockholders will result, and future investors may be granted rights superior to those of existing stockholders. To the extent that we borrow funds, the lenders of such funds will have claims to our assets before there can be any distribution to our stockholders. There can be no assurance, however, that additional financing, either debt or equity, will be available from any source or, if available, will be available on terms acceptable to us.

We cannot pay dividends on our common stock without first obtaining the written consent of the holders of a majority of our outstanding series D exchangeable preferred stock.

New Accounting Pronouncements

In December 2004, the FASB revised SFAS No. 123 (“SFAS No. 123(R)”). SFAS No. 123(R), Share-Based Payment, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Pro forma disclosure is no longer an alternative to financial statement recognition. SFAS No. 123(R) is effective for periods beginning after December 15, 2005. We are still evaluating the transition provisions allowed by SFAS No. 123 (R) and will adopt it in the first quarter of 2006. The financial statement impact is not expected to be materially different from that shown in the existing pro forma disclosure required under the original SFAS No. 123. The issuance of additional stock options in the future will cause SFAS 123(R) to have a greater impact on our financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There~~Foreign ~~were~~Currency noExchange ~~material changes in the Company’s exposure to market risk from December 31, 2004.~~Risks

The Company’s operations are conducted principally in the United Kingdom and most of the entities in the group have a functional currency of British Pounds.

There are principally two types of foreign exchange risk: transaction risks and translation risks. Transaction risks may impact the results of operations and translation risks may impact comprehensive income. These are discussed more fully below.

Transaction risks

Transactions in currencies other than the functional currency are translated at either the exchange rate in effect at the end of the month in which the transaction occurs or in some cases the rate in effect at the date of the transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated, are recognized in the consolidated statements of operations as Nexus Media Communications.

Nexus Media’s cash balances consist of Euros, Icelandic krona, British Pounds and U.S. dollars. This exposes the Company to foreign currency exchange rate risk in the Statement of Operations. The change in exposure from period to period is related to the change in the balance of the bank accounts based on timing of event receipts and payments. The Company attempts to use natural hedging in respect of overseas events by holding advance revenues in the relevant foreign currency to the extent that local currency costs are anticipated. At June 30, 2005, the Company held approximately 75 million Icelandic Krona (approx $1.2 million), and 0.3 million U.S dollars in the cash accounts and remains exposed to changes in the foreign currency rate. As of June 30, 2005, a 10% increase or decrease in the level of the Icelandic Krona exchange rate against the British Pound with all other variables held constant would result in a realized gain or loss of approximately $110,000. Such exchange rate fluctuations should have a smaller impact in future as the cash balances will reduce as the majority of the events revenue for the second half has been collected in the first half and costs will be incurred in the second half. Even including the Icelandic Fishing event, which takes place in September and then not for another four years, in excess of 85% of our 2005 revenue is expected to be in sterling.

Translation risks

The financial statements of Nexus Media with a functional currency of British Pounds are translated into U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated at period-end exchange rates while revenue and expenses are translated at the period’s average exchange rates. Adjustments resulting from these translations are accumulated and reported as a component of accumulated other comprehensive loss in stockholders’ equity.

The fluctuation in the exchange rates resulted in foreign currency translation losses reflected as a component of accumulated other comprehensive loss in stockholders’ equity of $1,054,335 at June 30 2005. Future changes in the value of the US dollar to British Pound could have a material impact on our financial position and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the quarterly period ended ~~March 31~~June 30, 2005, our management, with the participation of Charles E. Finelli, our Chief Executive Officer and acting Chief ~~Financial~~ Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on ~~these~~this ~~evaluations~~evaluation, heMr. ~~believes~~Finelli concluded that: the disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Mr. Finelli’s conclusion was based principally on the material weaknesses in the internal controls of the Company as identified by the Company and Deloitte & Touche LLP, our independent registered public accounting firm, and discussed below.

(a) our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(b) our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

~~There~~In ~~has~~connection ~~not~~with ~~been~~the quarterly ~~any~~review ~~change~~of inthe ~~our~~financial ~~internal~~statements of the Company for the period ~~control~~ended ~~over~~June ~~financial~~30, ~~reporting~~2005, ~~that~~the ~~occurred~~Company ~~during~~and Deloitte & Touche LLP, our ~~quarterly~~independent registered ~~period~~public accounting firm, have identified certain material weaknesses ~~ended~~in ~~March 31~~the Company’s internal controls. A material weakness is a significant deficiency, ~~2005~~or combination of significant deficiencies, that ~~has~~results ~~materially~~in ~~affected,~~more than a remote likelihood that a material misstatement of the annual or isinterim ~~reasonably~~financial ~~likely~~statements will not be toprevented ~~materially~~or ~~affect~~detected. The material weaknesses identified at the Company result from the acquisition of Nexus Media, ~~our~~which ~~internal~~before ~~control~~the ~~over~~acquisition ~~financial~~had no history of operating as a stand-alone company and was not required to prepare accounting statements in accordance with accounting principals generally accepted in the United States (“U.S. GAAP”) or the reporting requirements of the Securities and Exchange Commission (the “SEC”).

14Before the Company’s acquisition of Nexus Media on April 1, 2005, Nexus Media consisted of eight entities that were privately owned by Highbury House Communications plc, a company organized under the laws of the United Kingdom, and that were operated as part of that group of companies. As a result, a significant number of the controls required in a stand-alone entity, including having its own chief financial officer, were not present at Nexus Media. Since acquiring Nexus Media, the Company has been working to address the material weaknesses identified. Actions taken during the quarterly period ended June 30, 2005 include actively recruiting an interim chief financial officer of Nexus Media (which resulted in the hiring of such officer by Nexus after June 30, 2005), engaging third party accountants with U.S. GAAP skills to assist with the preparation of SEC reports, and commencing the implementation of the controls expected of a stand-alone entity.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1 Certification of Principal Executive Officer and acting Principal Financial Officer pursuant to Exchange Act Rule 13 a-14(a).

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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INDEX TO EXHIBITS

ERGO SCIENCE CORPORATION

Exhibit No.		Exhibit

3.1		Amended and Restated Certificate of Incorporation of the Registrant. Filed as exhibit 3.1 to the Registrant’s registration statement on Form S-4 (File No. 333-69172) filed with the Commission on September 7, 2001, and incorporated by reference herein.

3.2		By-Laws of the Registrant. Filed as exhibit 3.2 to the Registrant’s registration statement on Form S-4 (File No. 33-98162) filed with the Commission on September 7, 2001, and incorporated by reference herein.

4.1		Form of Stock Certificate of the Registrant’s Common Stock, par value $.01 per share. Filed as Exhibit 4.1 to the Registrant’s registration statement on Form S-4 (File No. 333-69172) filed with the Commission on September 7, 2001, and incorporated by reference herein.

10.1		Novated License and Royalty Agreement dated May 1, 1995, between the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, the Registrant, E. Science Incorporated, a Delaware corporation formerly known as Ergo Science Incorporated that is a subsidiary of the Registrant (“Ergo Science Incorporated”), and Ergo Research Corporation, a Delaware corporation that is a subsidiary of the Registrant. Filed as exhibit 10.2 to the Registrant’s registration statement on Form S-1 (File No. 33-98162) filed with the Commission on November 27, 1995, and incorporated by reference herein.

10.2		Indemnification Agreement dated October 6, 1995, between the Registrant and Manuel Cincotta, Jr., together with a schedule identifying substantially identical documents and setting forth the material details in which those documents differ from the foregoing document. Filed as exhibit 10.18 to the Registrant’s registration statement on Form S-1 (File No. 33-98162) filed with the Commission on November 27, 1995, and incorporated by reference herein.

10.3		Form of Indemnification Agreement between the Registrant and each of the Registrant’s officers and directors. Filed as exhibit 10.1 to the Registrant’s registration statement on Form S-4 (File No. 333-69172) filed with the Commission on September 7, 2001, and incorporated by reference herein.

10.4		Ergo Science Corporation 2001 Employee, Director and Consultant Stock Plan. Filed as Exhibit 10.3 to the Registrant’s registration statement on Form S-4 (File No. 333-69172) filed with the Commission on September 7, 2001, and incorporated herein by reference.

10.5		Ergo Science Corporation Stock Option Plan for Non-Employee Directors. Filed as Exhibit 99.2 to the Registrant’s registration statement on Form S-8 (File No. 333-73222) filed with the Commission on November 13, 2001, and incorporated herein by reference.

10.6		Ergo Science Corporation Amended and Restated 1995 Long-Term Incentive Plan. Filed as Exhibit 99.3 to the Registrant’s registration statement on Form S-8 (File No. 333-73222) filed with the Commission on November 13, 2001, and incorporated herein by reference.

10.7		Amended and Restated Option Agreement, dated October 12, 1993, between Ergo Science Incorporated and Albert H. Meier, Ph.D.; First Amendment to Amended and Restated Option Agreement, dated April 27, 1995, among the Registrant, Ergo Science Incorporated and Albert H. Meier, Ph.D.; and Second Amendment to Amended and Restated Option Agreement, dated November 6, 1995, between the Registrant and Albert H. Meier, Ph.D. Filed as Exhibit 99.4 to the Registrant’s registration statement on Form S-8 (File No. 333-73222) filed with the Commission on November 13, 2001, and incorporated herein by reference.

10.8		Option Agreement, dated March 1, 1993, between Ergo Science Incorporated and David R. Burt; First Amendment to Option Agreement, dated April 27, 1995, among the Registrant, Ergo Science Incorporated and David R. Burt; Second Amendment to Option Agreement, dated October 6, 1995, between the Registrant and David R. Burt; and Third Amendment to Option Agreement, dated November 6, 1995, between the Registrant and David R. Burt. Filed as Exhibit 99.5 to the Registrant’s registration statement on Form S-8 (File No. 333-73222) filed with the Commission on November 13, 2001, and incorporated herein by reference.

1721

10.9		License Agreement effective as of February 1, 1997, between The General Hospital Corporation and Ergo Science Corporation and Ergo Research Corporation. Filed as Exhibit 10.1 to the Registrant’s quarterly filing on Form 10-Q filed with the Commission on May 15, 1997 and incorporated by reference herein. [Portions of this exhibit have been omitted and filed separately with the Commission in accordance with Rule 406 of the Securities Act and the Registrant’s request for confidential treatment.]

10.10		Settlement Agreement dated as of October 6, 2000 between the Registrant and Louisiana State University. Filed as Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K (File No. 000-26988) filed with the Commission on April 2, 2001, and incorporated herein by reference.

10.11		Stock Purchase Agreement, dated as of August 1, 2003, by and between the Company and Court Square Capital Limited. Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-26988) filed with the Commission on August 14, 2003, and incorporated herein by reference.

10.12		Assignment Agreement, dated as of June 30, 2003, by and between the Company and Ergo Verisherungsgruppe AG regarding the sale of the ergo.com domain name. Filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-26988) filed with the Commission on August 14, 2003, and incorporated herein by reference.

10.13		Asset Purchase Agreement, dated as of November 24, 2003, by and between the Company and PLIVA d.d regarding the sale of the Company’s intellectual property. Filed as Exhibit 10.12 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 26, 2003 and incorporated herein by reference.

10.14		Share Purchase Agreement, dated as of February 8, 2005, by and between the Company and Highbury House Communications plc regarding the purchase of the business publishing division of Highbury House Communications plc,. Filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K (File No. 000-26988) filed with the Commission on March 30, 2005, and incorporated herein by reference.

14		Ergo Science Corporation Code of Business Conduct and Ethics. Filed as Exhibit 14 to the Registrant’s Annual Report on Form 10-K (File No. 000-26988) filed with the Commission on March 30, 2004, and incorporated herein by reference.

31.1		Certification of Principal Executive Officer and acting Principal Financial Officer pursuant to Exchange Act Rule 13 a-14(a).

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

1822

Filing Compare · ERGO SCIENCE CORP /DE/