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 September 30, 2005
-OR-
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

For the quarterly period ended September 30, 2006

-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. 333-69172

ERGO SCIENCE CORPORATION

(Exact name of registrant as specified in its charter)

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

~~Indicate by check mark whether the registrant (1) has filed all reports~~Registrant’s ~~required~~telephone tonumber, beincluding ~~filed~~area ~~by Section 13 or 15~~code: (d978) 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 o688-8833

Indicate by check mark whether the registrant is(1) anhas filed ~~accelerated~~all ~~filer (as~~reports ~~defined~~required into ~~Rule~~be ~~12b-2~~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 o

~~Yes o~~Indicate Noby ýcheck mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~Large byaccelerated ~~check mark whether the registrant is a shell company (as~~filer o Accelerated ~~defined in Exchange Act Rule 12b~~filer o Non-~~2).~~accelerated filer x

~~Yes o~~Indicate Noby ýcheckmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

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

At November 1, ~~2005~~2006 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	~~FINANCIAL INFORMATION~~
ITEM 1.	~~ITEM 1.~~	Financial Statements	~~Financial Statements~~
			Unaudited Condensed Consolidated Balance Sheet as of September 30, 2005 and the Nexus Media (Predecessor) Balance Sheet as of December 31, 2004
		Unaudited Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005		3
			Unaudited Condensed Consolidated Statement of Operations for the three and six months ended September 30, 2005 and the Nexus Media (Predecessor) Statements of Operations for the three months ended March 31, 2005 and the three and nine months ended September 30, 2004
		Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2006 and the three and six months ended September 30, 2005, and the Nexus Media (Predecessor) Statement of Operations for the three months ended March 31, 2005		4
			Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2005 and the Nexus Media (Predecessor) Statements of Cash Flows for the three months ended March 31, 2005 and the nine months ended September 30, 2004
		Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and the six months ended September 30, 2005, and the Nexus Media (Predecessor) Statement of Cash Flows for the three months ended March 31, 2005		5
			Unaudited Notes to Condensed Consolidated Financial Statements
		Unaudited Notes to the Condensed Consolidated Financial Statements		6
ITEM 2.	~~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~~	14
ITEM 3.	~~ITEM 3.~~	Quantitative and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~	20
ITEM 4.	~~ITEM 4.~~	Controls and Procedures	~~Controls and Procedures~~	21
PART II.	OTHER INFORMATION	~~OTHER INFORMATION~~
ITEM 1.	~~ITEM 1.~~	Legal Proceedings	~~Legal Proceedings~~	22
	ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 1A.		Risk Factors		22
	ITEM 3.		Defaults Upon Senior Securities
ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds		22
	ITEM 4.		Submission of Matters to a Vote of Security Holders
ITEM 3.		Defaults Upon Senior Securities		22
	ITEM 5.		Other Information
ITEM 4.		Submission of Matters to a Vote of Security Holders		22
	ITEM 6.		Exhibits
ITEM 5.		Other Information		22
SIGNATURES
ITEM 6.		Exhibits		22
INDEX TO EXHIBITS
SIGNATURES				23
INDEX TO EXHIBITS				24

PART I~~. FINANCIAL INFORMATION~~

ITEM 1. FINANCIAL STATEMENTS

ERGO SCIENCE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

					Predecessor
	September 30,			December 31,
	Ergo				Nexus Media
	2006			2005
	September 30, 2005				December 31, 2004
ASSETS
ASSETS
Current assets:
Current assets:
Cash and cash equivalents	$	5,644,079		$	7,220,399
Cash and cash equivalents	$	7,827,811			$	1,710,235
Trade receivables (net of allowance of doubtful accounts at September 30, 2006: $338,692 and December 31, 2005: $175,252)	4,236,829			4,700,303
Trade receivables (net of allowance of doubtful accounts at September 30, 2005: $420,000 and December 31, 2004: $276,000)	4,059,631				6,851,599
Inventory	566,234			273,470
Inventory	448,675				554,818
Deferred taxes	446,095			525,993
Deferred taxes	—				422,836
Prepaid and other current assets	2,238,581			935,936
Prepaid and other current assets	2,629,796				1,766,037
Total current assets	13,131,818			13,656,101
Total current assets	14,965,913				11,305,525
Property & equipment, net	4,059,119			3,800,299
Property & equipment, net	3,933,201				4,217,589
Intangible assets, net	6,917,192			6,528,140
Intangible assets, net	6,602,884				7,146,680
Goodwill	7,960,961			8,107,340
Goodwill	10,642,707				16,368,388
Total assets	$	32,069,090		$	32,091,880
Receivable from Highbury House plc	—				50,903,501
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total assets	$	36,144,705			$	89,941,683
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	5,776,478		$	5,860,815
Current liabilities:
Deferred revenue	5,314,328			3,456,656
Accounts payable	$	2,552,423			$	4,114,947
Other creditors	423,818			402,858
Accrued expenses and deferred revenue	8,865,976				6,462,697
Income taxes payable	94,000			890,323
Other creditors	405,373				426,793
Total current liabilities	11,608,624			10,610,652
Payable to Highbury House plc	—				3,413,116
Commitments and contingencies	—			—
Income taxes payable	94,000				—
Stockholders’ equity:
Total current liabilities	11,917,772				14,417,553
Preferred stock, $.01 par value, 10,000,000 shares authorized; 6,903 shares of Series D preferred stock issued and outstanding at September 30, 2006 and December 31, 2005 (liquidation preference of $13,557,524 at September 30, 2006)	4,306,520			4,306,520
Other long-term liabilities (Highbury House plc)	—				32,035,520
Common stock, $.01 par value, 50,000,000 shares authorized; 7,149,578 shares issued at September 30, 2006 and December 31, 2005	71,496			71,496
Commitments and contingencies (Note 10)	—				—
Additional paid-in capital	111,884,330			111,880,321
Stockholders’ equity:
Cumulative dividends on preferred stock	(2,296,953		)	(2,296,953		)
Preferred stock, $.01 par value, 10,000,000 shares authorized; 6,903 shares of Series D preferred stock issued and outstanding at September 30, 2005 (liquidation preference of $12,779,266 at September 30, 2005)	4,306,520				—
Accumulated deficit	(90,976,736		)	(88,061,177		)
Common stock, $.01 par value, 50,000,000 shares authorized; 7,149,578 shares issued at September 30, 2005	71,496				—
Treasury stock (at cost), 1,335,722 shares at September 30, 2006 and December 31, 2005	(2,417,657		)	(2,417,657		)
Additional paid-in capital	111,880,321				—
Cumulative translation adjustment	(110,534		)	(2,001,322		)
Cumulative dividends on preferred stock	(2,296,953		)		—
Total stockholders’ equity	20,460,466			21,481,228
Accumulated deficit	(86,129,248		)		—
Total liabilities and stockholders’ equity	$	32,069,090		$	32,091,880
Treasury stock (at cost), 1,335,722 shares at September 30, 2005	(2,417,657		)		—
Cumulative translation adjustment	(1,187,546		)		—
Owners’ net investment	—				43,488,610
Total stockholders’ equity	24,226,933				43,488,610
Total liabilities and stockholders’ equity	$	36,144,705			$	89,941,683

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

ERGO SCIENCE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

												Predecessor
	Ergo					Ergo			Ergo			Nexus Media
	Three months ended September 30,					Nine months ended September 30,			Six months ended September 30,			Three months ended March 31,
	2006			2005		2006			2005			2005

Net revenues	$	9,311,031		$	10,907,195	$	22,767,600		$	19,366,713		$	6,584,877
Cost of revenues	6,530,167			7,657,179		16,913,889			13,703,360			5,922,761
Gross profit	2,780,864			3,250,016		5,853,711			5,663,353			662,116

Operating expenses:
General and administrative	2,839,805			2,556,571		8,687,473			5,656,840			2,433,071
Amortization of intangibles	63,883			51,203		186,349			103,195			52,951
Total operating expenses	2,903,688			2,607,774		8,873,822			5,760,035			2,486,022
Net operating income (loss)	(122,824		)	642,242		(3,020,111		)	(96,682		)	(1,823,906		)
Other Income:
Interest and other income	65,064			56,975		202,081			85,882			69,971
Net income (loss) before taxes	(57,760		)	699,217		(2,818,030		)	(10,800		)	(1,753,935		)
Income tax expense (benefit)	(127,290		)	—		97,529			449,614			(353,536		)
Net income (loss)	$	69,530		$	699,217	$	(2,915,559	)	$	(460,414	)	$	(1,400,399	)

								Predecessor
Net income (loss) per common share:
	Ergo			Ergo				Nexus Media			Nexus Media		Nexus Media
Basic	$	(0.01	)	$	0.12		$	(0.50	)	$	(0.08	)
	Three months ended September 30, 2005			Six months ended September 30, 2005				Three months ended March 31, 2005			Three months ended September 30, 2004		Nine months ended September 30, 2004
Diluted	$	(0.01	)	$	0.12		$	(0.50	)	$	(0.08	)
								As Restated
Weighted average common shares outstanding:
Net revenues	$	10,907,195		$	19,366,713			$	6,584,877		$	10,219,151	$	27,102,971
Basic	5,813,856			5,813,856			5,813,856			5,813,856
Cost of revenues	7,657,179			13,703,360				5,922,761			8,164,424		20,614,000
Diluted	5,813,856			5,819,328			5,813,856			5,813,856
Gross profit	3,250,016			5,663,353				662,116			2,054,727		6,488,971
Operating expenses:
General and administrative	2,556,571			5,656,840				1,648,391			1,566,547		5,626,842
Amortization of intangibles	51,203			103,195				52,951			50,939		153,007
Impairment of intangibles	—			—				—			50,030		150,275
Total operating expenses	2,607,774			5,760,035				1,701,342			1,667,516		5,930,124
Net operating income (loss)	642,242			(96,682		)		(1,039,226		)	387,211		558,847
Other Income:
Interest and other income	56,975			85,882				69,971			62,570		176,310
Net income (loss) before taxes	699,217			(10,800		)		(969,255		)	449,781		735,157
Income tax expense (benefit)	—			449,614				(42,775		)	133,222		255,037
Net income (loss)	$	699,217		$	(460,414	)		$	(926,480	)	$	316,559	$	480,120
Net income (loss) per common share:
Basic	$	0.12		$	(0.08	)
Diluted	$	0.12		$	(0.08	)
Weighted average common shares outstanding:
Basic	5,813,856			5,813,856
Diluted	5,819,328			5,813,856

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

ERGO SCIENCE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Ergo			Ergo			Predecessor Nexus Media
	Nine Months ended September 30, 2006			Six Months ended September 30, 2005			Three Months ended March 31, 2005

Cash flows from operating activities:
Net loss	$	(2,915,559	)	$	(460,414	)	$	(1,400,399	)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
Depreciation	209,504			137,430			73,976
Amortization of intangibles	186,349			107,746			52,951
Stock based compensation	4,009			—			—
Bad debt expense	(119,538		)	50,671			116,600
Deferred income taxes	97,529			467,959			(348,809		)
Changes in operating assets and liabilities:
Accounts receivable	906,976			619,657			1,611,211
Inventory	(262,758		)	204,539			56,540
Prepaid expenses and other current assets	(1,128,478		)	850,175			(1,022,749		)
Accounts payable	(496,642		)	169,227			(2,335,763		)
Accrued expenses and deferred revenue	1,262,807			589,540			2,047,033
Other creditors	(24,508		)	416,996			(426,164		)
Net cash (used in) provided by operating activities	(2,280,309		)	3,153,526			(1,575,573		)
Cash flows from investing activities:
Purchase of property and equipment	(131,544		)	(139,368		)	(112,438		)
Acquisition of Nexus Media	420,918			(21,201,216		)	—
Net cash provided by (used in) investing activities	289,374			(21,340,584		)	(112,438		)
Net decrease in cash and cash equivalents	(1,990,935		)	(18,187,058		)	(1,688,011		)
Effect of exchange rates on cash and cash equivalents	414,615			(121,177		)	(22,224		)
Cash and cash equivalents at beginning of period	7,220,399			26,136,046			1,710,235
Cash and cash equivalents at end of period	$	5,644,079		$	7,827,811		$	—

	Ergo Science Consolidated Six months ended September 30, 2005			Nexus Media Three months ended March 31, 2005			Nexus Media Nine months ended September 30, 2004
Net cash provided by (used in) operating activities	$	3,153,526		(1,575,574		)	$	(481,203	)
Cash flows from investing activities:
Purchase of property and equipment	(139,368		)	(112,438		)	(155,564		)
Proceeds on disposal of property and equipment	—			—			73,210
Acquisition of Nexus Media	(21,201,216		)	—			—
Net cash used in investing activities	(21,340,584		)	(112,438		)	(82,354		)
Net decrease in cash and cash equivalents	(18,187,058		)	(1,688,012		)	(563,557		)
Effect of exchange rates on cash and cash equivalents	(121,177		)	(22,223		)	14,072
Cash and cash equivalents at beginning of period	$	26,136,046		$	1,710,235		$	733,879
Cash and cash equivalents at end of period	$	7,827,811		$	—		$	184,394

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

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~5

5ERGO SCIENCE CORPORATION

~~ERGO~~NOTES ~~SCIENCE~~TO ~~CORPORATION~~UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~NOTES~~1. Background TOand ~~CONDENSED~~Basis ~~CONSOLIDATED~~of ~~FINANCIAL STATEMENTS~~Presentation

Ergo Science Corporation (~~Unaudited~~the “Company” or “Ergo”), through its indirect wholly owned subsidiaries Nexus Media Communications Limited, Nexus Business Media Limited, Nexus Commercial Media Limited, Columbus Travel Publishing Limited, Harpers Wines & Spirits Limited, The International Wine and Spirit Competition Limited, Nexus Business Limited, and Nexus Business Communications Limited (collectively “Nexus Media Communications” or “Nexus Media” or the “Predecessor”), provides business to business publishing information across a diverse range of sectors including printed and web-based magazines, data services and directories, staging exhibitions, conferences and award ceremonies. The Company’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 50 printed magazines and directories (including: Motor Trader; Harpers Wines & Spirits, The Grower, Independent Retail News, World Fishing; The World Travel Guide and Electrical Review); and approximately 30 Events including exhibitions, awards evenings and conferences such as the International Wine & Spirit Competition; the Undersea Defence Technology Conference & Exhibition; the Motor Trader Awards and the Grower of the Year Awards.

1These financial statements include a consolidated balance sheet (Ergo and Nexus Media) as of September 30, 2006 and December 31, 2005. ~~Nature~~ The statement of operations includes ~~Operations~~a consolidated statement for the three and nine month periods ended September 30, 2006 (Ergo and Nexus Media) and for comparative purposes includes a consolidated statement of operations for the three and six month period ended September 30, 2005 and the Nexus Media stand-alone combined statement of operations for the three month period ended March 31, 2005. The statement of cash flows includes a consolidated statement for nine month period ended September 30, 2006 and for comparative purposes includes a consolidated statement of cash flows for the six month period ended September 30, 2005 and the Nexus Media stand-alone combined statement of cash flows for the three month period ended March 31, 2005.

~~Ergo~~The ~~Science Corporation (the “Company” or “Ergo”)~~combined ~~acquired~~financial ~~the~~statements ~~business to business publishing division (“Bcom” or “Nexus Media Communications” or “Nexus Media”)~~ of ~~Highbury~~the ~~House~~Predecessor ~~Communications~~have ~~plc (“Highbury~~been ~~House”),~~derived afrom ~~company organized under~~ the ~~laws~~ aggregation of the ~~United~~financial ~~Kingdom~~statements ~~on April 1, 2005. The purchase price~~ of ~~GBP 12.5 million (approximately $23.395 million) was subject to a £1.041 million (approximately $1.958 million) working capital adjustment. At closing therefore,~~ the ~~Company~~individual ~~paid~~Nexus ~~Highbury~~Media ~~House~~entities ~~GBP 11.459 million (approximately $21.555 million). After completion the final working capital amount was confirmed~~ and ~~an additional working capital adjustment was made to~~ the ~~Company in the amount of GBP 464,000 (approximately~~ ~~$873,000),~~accounting ~~which~~records ~~we received in the third quarter. As~~ of ~~September~~Highbury 30House, ~~2005, the~~Nexus ~~Company~~Media’s ~~had~~former ~~paid~~parent ~~a total of $21~~company,~~201,216,~~ ~~which includes $519,000 in~~and ~~capitalized~~reflect ~~acquisition costs. The acquisition was funded by~~ the ~~Company~~historical ~~with its~~basis ~~own~~of ~~cash~~assets and ~~cash~~liabilities ~~equivalents.~~of the Nexus Media~~, comprising eight wholly-owned~~ ~~subsidiaries~~entities ~~provides~~under ~~information~~US ~~across a diverse range of sectors including printed and web-based magazines, data services and directories, staging exhibitions, conferences and award ceremonies~~GAAP.

~~Nexus~~The accompanying ~~Media’s~~financial ~~business~~statements ~~includes:~~are 13unaudited ~~trade~~and ~~names~~have ~~(including:~~been ~~Checkout;~~prepared ~~Electrical~~by the Company in ~~Times;~~accordance ~~Independent~~with ~~Grocer;~~accounting ~~The~~principles ~~Motor~~generally ~~Ship;~~accepted ~~World~~in ~~Travel~~the ~~Guide;~~United States of America and ~~Motor Trader);~~Securities ~~150~~and ~~domain~~Exchange ~~names~~Commission (~~including:~~“SEC”) ~~columbusguides.com;~~regulations ~~groweroftheyear.com;~~for ~~harpers-wine.com;~~interim ~~motorship.com;~~financial ~~motortrader~~information.~~com;~~ ~~travel-guide.com;~~Certain information and footnote disclosure ~~worldfish~~normally included in the Company’s annual financial statements have been condensed or omitted pursuant to such rules and regulations.~~com);~~ The ~~approximately~~interim 45financial ~~magazine~~statements, ~~titles~~in the opinion of management, reflect all adjustments (including: ~~Motor~~normal ~~Trader;~~recurring ~~World~~accruals) ~~Fishing~~necessary ~~Magazine;~~for ~~Export~~a ~~Times;~~fair ~~Checkout;~~statement ~~World~~of ~~Travel~~the ~~Guide;~~results ~~Television~~for the three and nine ~~World~~month periods ended September 30, 2006; the three and ~~Electronics~~six ~~World)~~month periods ended September 30 2005; and ~~approximately~~the 35three ~~exhibitions~~months ~~(including:~~ended March 31, 2005. The December 31, 2005 consolidated balance ~~International~~sheet ~~Wine~~and &the ~~Spirit~~Nexus ~~Competition;~~Media ~~The~~Consolidated ~~Retail~~Statements ~~Industry~~of ~~Awards;~~Operations and Cash Flows ~~Quality~~for ~~Food~~the ~~and~~three ~~Drinks~~month ~~Awards;~~period ~~and~~ended ~~Europe~~March ~~Power~~31, ~~Conference~~2005 are derived from audited financial statements. These interim financial statements should be read in conjunction with the Company’s audited financial statements and ~~Exhibition)~~notes thereto for the year ended December 31, 2005 which was filed with the SEC on Form 10-K on March 31, 2006.

~~Nexus~~The ~~Media~~amounts ~~operates~~presented ~~its~~for ~~magazines~~the quarter ended March 31, 2005 are different from those previously reported on Form 10-Q/A filed on November 22, 2005 as a result of post balance sheet events ~~and~~that ~~other~~have arisen ~~publications~~since ~~under~~November 22, 2005. These changes principally relate to the ~~following~~fact ~~legal~~that Highbury ~~entities:~~House was placed in to receivership in January 2006 when certain lenders of Highbury House appointed an administrative receiver to distribute Highbury House’s assets to its secured creditors. An administrative receiver performs similar functions of a US Bankruptcy trustee upon appointment by a bankruptcy court. Further details of these events are included within Note 16 of the Form 10-K as filed with the SEC on March 31, 2006.

~~• Nexus Business Communications Limited~~6

~~• Nexus Business Media Limited~~2. Goodwill

• Goodwill is calculated as the difference between the cost of acquisition of Nexus Media and the fair value of the net assets acquired. Nexus Media ~~Communications~~operates ~~Limited~~in the UK and has a £ Sterling functional currency. Consequently goodwill related to the acquisition is accounted for as a £ Sterling functional currency asset. Each financial period, all assets, including goodwill, and liabilities of group entities with a non US dollar functional currency are translated into US dollars, Ergo’s reporting currency, using the closing rate method.

~~• Columbus~~Included in the ~~Travel~~Company’s ~~Publishing~~liabilities ~~Limited~~at December 31, 2005 and March 31, 2006 was an amount for pre- acquisition tax liabilities of $870,498 (£463,302). The Company was notified by the UK tax authorities in the second quarter of 2006 that no amount will be required to be paid by the Company in this respect. Pursuant to EITF 93-7, Uncertainties related to Income Taxes in a Purchase Business Combination, this adjustment has resulted in a decrease to goodwill.

~~• Harpers Wines~~The &roll-forward ~~Spirits~~of ~~Limited~~the goodwill balance is as follows:

• The International Wine and Spirit Competition Limited

	Amount
December 31, 2005	$	8,107,340
Adjustment to pre-acquisition tax liabilities	(870,498		)
Foreign currency translation adjustment	724,119
September 30, 2006	$	7,960,961

~~• Nexus~~3. Intangible ~~Commercial~~assets, ~~Media Limited~~net

~~• Nexus~~All ~~Business~~intangible assets were acquired in conjunction with the ~~Limited~~acquisition of Nexus Media on April 1, 2005.

~~2. Basis~~Intangible ofassets consist ~~Presentation~~of the following:

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 financial 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 September 30, 2005 and a Nexus Media stand alone condensed combined balance sheet as of December 31, 2004. The statement of operations includes a condensed consolidated statement for the three and six month periods ended September 30, 2005 (Ergo and Nexus Media) and for comparative purposes includes the Nexus Media stand alone combined statement of operations for the three and nine month periods ended September 30, 2004 and the three month period ended March 31, 2005. The statement of cash flows includes a condensed consolidated statement (Ergo and Nexus Media) for the six month period ended September 30, 2005 and for comparative purposes includes the Nexus Media stand alone condensed combined statement of cash flows for the three months ended March 31, 2005 and the Nexus Media stand alone condensed combined statement of cash flows for the nine month period ended September 30, 2004.

	Weighted average amortization period	September 30, 2006			December 31, 2005
Finite Lived Intangible Assets:
Trademarked titles	19 years	$	2,283,352		$	1,624,266
Unregistered titles	18 years	2,034,429			1,873,492
Contractual events	29 years	550,250			504,970
Total	20 years	4,868,031			4,002,728
Less: accumulated amortization		(350,230		)	(152,616		)
		4,517,801			3,850,112
Indefinite Lived Intangible assets:
Trademarked titles	N/A	1,122,960			1,503,950
Unregistered titles	N/A	1,276,431			1,174,078
Total intangible assets		$	6,917,192		$	6,528,140

~~Prior~~Net intangible toassets have increased for the ~~acquisition~~ bythree ~~Ergo,~~and ~~Nexus~~nine ~~Media~~month ~~was~~periods ~~not~~ended September a30, ~~stand~~2006 ~~alone~~by ~~legal~~$84,041 ~~entity. Therefore~~and ~~the~~$575,401 ~~condensed~~as ~~combined~~a ~~financial statements~~result of ~~Nexus~~changes ~~Media~~in ~~have~~the foreign ~~been~~currency ~~derived~~exchange ~~from~~rate between the ~~aggregation~~US ofDollar ~~the~~and ~~financial information~~UK ofPound ~~the~~Sterling.

6The roll-forward of the intangible assets is as follows:

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”.

	Amount
December 31, 2005	$	6,528,140
Amortization for the nine month period ended September 30, 2006	(186,349		)
Foreign currency translation adjustment	575,401
September 30, 2006	$	6,917,192

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 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 September 30, 2005 and 2004.7

InThe ~~the~~estimated ~~opinion of~~future ~~the~~amortization ~~Company,~~expense ~~results~~related ofto ~~operations~~intangible ~~for~~assets, ~~the~~assuming ~~interim~~no ~~periods are not necessarily~~future ~~indicative~~impairment of the ~~results~~underlying ofassets ~~operations~~as ~~to be expected for the fiscal year. These interim financial statements should be read in conjunction with the audited financial statements~~ of ~~Nexus Media~~September ~~(Bcom) for the year ended December 31~~30, ~~2004,~~2006 ~~which~~is ~~are~~as ~~contained in Form 8-K/A filed with the SEC on June 17, 2005.~~follows:

Revenue recognition

Fiscal Year	Trademarks		Unregistered Titles		Contractual Events		Total
2006	$	30,649	$	28,533	$	4,584	$	63,766
2007	122,595		114,130		18,332		255,057
2008	122,595		114,130		18,332		255,057
2009	122,595		114,130		18,332		255,057
2010	122,595		114,130		18,332		255,057
2011	122,595		114,130		18,332		255,057
thereafter (a)	1,478,566		1,273,963		426,221		3,178,750
Total	$	2,122,190	$	1,873,146	$	522,465	$	4,517,801

~~The~~(a) Trademarks ~~Company~~will ~~considers amounts to~~ be ~~earned~~fully ~~once evidence~~amortized ofin anthe ~~arrangement~~year ~~has been obtained~~2025, ~~services~~unregistered ~~are~~titles ~~delivered, fees are~~will ~~fixed~~be orfully ~~determinable~~amortized ~~and~~in ~~collectability~~the isyear ~~reasonably~~2030 ~~assured. Business publication revenue~~ and ~~pre-publication~~ ~~costs~~contractual ~~are~~events ~~recognized~~will onbe ~~the mailing date of the~~fully ~~publication. Similarly,~~amortized ~~Competition~~in ~~or Event revenue is recognized on~~ the ~~date~~year ~~the actual event takes place~~2035. ~~Any income received or costs incurred are deferred until such dates. Subscription revenue is recognized over the period of the subscription.~~

~~Cost~~4. Non cash ~~recognition~~transactions

~~Direct~~During ~~and incremental magazine costs are deferred until~~ the ~~magazines~~three ~~are~~months ~~mailed~~ended toMarch ~~the customer~~31, ~~at which point they are expensed in the income statement. Direct and incremental event costs~~2005, and ~~salary costs, are deferred until the date on which the event~~ ~~commences~~prior ~~and~~to ~~are~~their ~~then~~acquisition ~~expensed~~by inErgo, ~~the~~Nexus ~~income~~Media ~~statement.~~entities ~~Where~~declared ittwo isdividends ~~anticipated~~totaling ~~that an event will be loss making~~£14,920,567 ~~the~~(approximately ~~total anticipated loss on the event is recognized in the period when management consider a loss likely~~$28,216,000).

3In the three months ended March 31, 2005, and prior to their acquisition by Ergo, Nexus Media recorded a profit of £4,564,475 (approximately $8,632,000) on the sale by a Nexus Media entity of Highbury Nexus Special Interests Limited. ~~Stock~~ This ~~Based~~has ~~Compensation~~been accounted for as a capital contribution through the owners’ net investment and the resulting balance with Highbury House was also settled on the acquisition.

~~Statement of Financial~~As ~~Accounting~~discussed ~~Standards~~in ~~No. 123,~~Note ~~“Accounting for Stock-Based Compensation” (“SFAS 123”) requires that companies either recognize compensation expense for grants of stock~~2, ~~stock~~included ~~options,~~in ~~and~~the ~~other~~Company’s ~~equity instruments~~liabilities ~~based~~at onDecember ~~fair value~~31, ~~or provide pro forma disclosure of net income~~2005 ~~or loss~~ and ~~earnings~~March or31, ~~loss~~2006 ~~per~~was ~~share~~an inamount ~~the~~for ~~notes~~pre-acquisition totax ~~the~~liabilities ~~financial~~of ~~statements~~$870,498 (£463,302). The Company ~~follows~~was ~~the~~notified ~~disclosure~~by ~~provisions~~the ofUK ~~SFAS 123~~tax ~~and applies~~authorities ~~APB Opinion 25 and related interpretations~~ in ~~accounting for its~~the ~~employee~~second ~~plans.~~quarter ~~Accordingly,~~that nothe ~~compensation~~liability ~~cost~~had ~~has~~ been ~~recognized~~extinguished ~~for~~with ~~its stock~~no ~~option plans since all options issued were for a fixed number of shares~~payment ~~and~~required ~~had fixed exercise prices equal~~ to ~~the~~be ~~fair~~paid ~~market~~by ~~value of~~ the ~~common stock on the grant date~~Company. ~~The~~Pursuant ~~effects~~to ofEITF ~~applying~~93-7, ~~SFAS 123 in~~ this ~~pro~~adjustment ~~forma~~resulted ~~disclosure~~in ~~are~~a ~~not~~decrease ~~likely~~ to ~~be representative of the effects on reported income or loss for future years~~goodwill. ~~Had~~Consequently, ~~compensation cost for~~ the Company’s ~~stock-based compensation~~recorded ~~plans been determined based on the fair value at the grant dates~~a asdecrease ~~calculated~~ in ~~accordance~~goodwill ~~with SFAS 123, the Company’s net loss~~ and ~~loss per~~a ~~share~~decrease ~~for~~in ~~the~~tax ~~three~~liabilities ~~and~~as ~~six~~at ~~month~~June ~~periods ended September~~ 30, ~~2005 would have been increased to the pro forma amounts indicated below:~~ 2006.

75. Barter transactions

	Three months ended September 30, 2005		Six months ended September 30, 2005
Net income (loss):
As reported	$	699,217	$	(460,414	)
Stock-based compensation included in reported net income (loss), net of related tax	—		—
Pro forma employee stock compensation expense	2,426		6,712
Pro forma net income (loss)	$	696,791	$	(467,126	)
Net income (loss) per share—basic diluted
As reported	$	0.12	$	(0.08	)
Pro forma	$	0.12	$	(0.08	)
Net income (loss) per share—diluted
As reported	$	0.12	$	(0.08	)
Pro forma	$	0.12	$	(0.08	)

Revenue from barter transactions (advertising provided in exchange for goods and services) is recognized as income when the advertisement is published and goods or services received are charged to expense or capitalized as appropriate when received or used. The Company records barter transactions at the estimated fair market value of advertising surrendered as this is most readily determinable. Barter revenues and expense are always equal and therefore offset. Barter revenue and expense for the three month period ended September 30, 2006 and 2005 was $161,556 and $3,123, respectively. Barter revenue and expense for the nine month period ended September 30, 2006 and 2005 was $323,996 and $16,577, respectively.

~~The~~6. Stock ~~fair~~based ~~value of each stock option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:~~compensation

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

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R), Share-Based Payments, and selected the modified prospective method to report stock-based compensation amounts in the consolidated financial statements. Prior to adoption of SFAS No. 123(R), the Company provided the disclosures required under SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosures.

NoThe ~~stock~~Company ~~options~~is currently ~~were~~using ~~granted~~the ~~during~~Black-Scholes ~~the~~option ~~three~~pricing ~~month~~model ~~period~~to ~~ended~~determine the fair ~~September~~value ~~30,~~of ~~2005~~all option grants. ~~During~~ No options were granted in the ~~three~~ six month period ~~ended~~ to June 30, ~~2005,~~2006. ~~the~~The Company granted 22,500 ~~stock~~ options to a ~~director~~ new member of ~~the~~its ~~Company~~board of directors on September 11, 2006 at ~~the~~an ~~current~~exercise ~~fair~~price ~~market~~of ~~value~~$.80 onper share, which represented the ~~date~~fair value of the ~~grant~~ Company’s stock price on that date. ~~Those~~ No other options ~~vest~~were ~~annually~~granted ~~over~~during this period. Due to the adoption of SFAS No. 123(R), the Company recognized a ~~five~~compensation ~~year~~expense ~~period~~of approximately $1,100 and $4,000 in the three and nine month periods ended September 30, 2006, which have been recorded as components of general and administrative expenses in the statement of operations.

~~4. Acquisition~~Nexus Media had no stock based compensation; therefore pro forma net income is identical to the amounts disclosed within the statement of ~~Nexus~~operations ~~Media~~for ~~Communications~~the three months ended March 31, 2005. Had compensation cost for the Company’s stock-based compensation plans been determined based on their 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 and six months ended September 30, 2005 would have been increased to the pro forma amounts indicated below:

As discussed in Note 1 on April 1, 2005, the Company acquired Nexus Media Communications from Highbury House. The purchase price allocation is as follows, however, this remains provisional since certain matters relating to Highbury House continue to be finalized:8

Description	April 1, 2005
	Three months ended September 30, 2005			Six months ended September 30, 2005
Assets:
Net income (loss):
Trade receivables	$	5,028,628
As reported	$	699,217		$	(460,414	)
Inventory	691,129
Stock-based compensation included in reported net loss, net of related tax	—			—
Other current assets	3,158,837
Pro forma employee stock compensation expense	2,426			6,712
Property and equipment	4,196,130
Net income (loss)	$	696,791		$	(467,126	)
Goodwill	11,354,786
Net income (loss) per share – basic
Trademarks and intangible assets	7,149,215
As reported	$	0.12		$	(0.08	)
Total assets acquired	$	31,578,725
Pro forma	$	0.12		$	(0.08	)
Liabilities:
Net income (loss) per share – diluted
Accounts payable	$	1,723,615
As reported	$	0.12		$	(0.08	)
Deferred revenue and accrued expenses	8,532,239
Pro forma	$	0.12		$	(0.08	)
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 refund	(873,000		)
	$	21,322,871

8The following table summarizes stock option activity from January 1, 2006 to September 30, 2006:

The unaudited pro forma financial information in the table below summarizes the combined results of Nexus Media and Ergo for the nine month period ended September 30, 2005 and the three and nine month periods ended September 30, 2004 as though the companies had been combined as of January 1, 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.

	Shares		Weighted Average Option Price
Outstanding at December 31, 2005	50,875		$	2.07
Granted	22,500		0.80
Forfeited	(45,000	)	1.98
Expired	(375	)	13.42
Outstanding at September 30, 2006	28,000		1.04
Exercisable at September 30, 2006	5,500		$	2.01

	Nine months ended September 30, 2005			Three months ended September 30, 2004		Nine months ended September 30, 2004
Revenue	$	26,031,258		$	10,219,151	$	27,102,971
Net (loss) income	(1,403,388		)	191,362		(113,446		)
(Loss) income per common share	$	(0.16	)	$	0.03	$	0.02

The Company granted 22,500 options to a new member of the board of directors in the three month period ended September 30, 2006. The exercise price of the option is $0.80, which represents the fair value of the Company’s stock price on the date of grant. On September 11, 2006 one of the Company’s board members resigned which resulted in the forfeiture of his 22,500 options. As a result the Company’s total options outstanding has remained the same as the previous quarter end.

~~5. Cash~~For stock ~~and~~options granted in the three month period ended September 30, 2006, the ~~Cash~~fair ~~Equivalents~~value of the stock option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

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 September 30, 2005 and December 31, 2004 were comprised of amounts held in cash and money market accounts.

	Three months ended September 30, 2006
Expected Life	5 years
Expected Volatility	50	%
Dividend Yield	0	%
Weighted Average Risk-free Interest Rate	4.73	%

67. ~~Non~~Net ~~Cash~~loss ~~Transactions~~per common share

~~During~~Basic loss per common share is computed by dividing net loss by the ~~three~~weighted ~~months~~average ~~ended~~number ~~March~~of common ~~31,~~shares ~~2005,~~outstanding ~~Nexus~~for the period. ~~Media~~Diluted ~~entities~~earnings ~~declared~~per ~~two~~common ~~dividends~~share ~~totaling~~is ~~£14~~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,~~920,567~~ ~~(approx.~~such as stock options; ~~$28~~however,~~216,000). The~~ ~~balance~~in accordance with ~~Highbury~~the ~~House~~guidance ~~group~~provided ~~companies~~within atSFAS ~~March~~No. 128 no ~~31,~~potential ~~2005,~~common shares are included ~~this~~in ~~amount,~~the ~~which~~computation ~~was~~of ~~settled~~any asdiluted per-share ~~part~~amount ofwhen the ~~acquisition~~Company ~~by Ergo~~has incurred a loss from continuing operations.

In the three months ended March 31, 2005, Nexus Media recorded 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 Owners’ net investment and the resulting balance with Highbury House was also settled on the acquisition.9

7During the three month period ended September 30, 2006, options to purchase 28,000 shares of common stock were not included in the computation of diluted net loss per share because all options outstanding had exercise prices in excess of the average market price of the Company’s common stock. ~~Net~~ ~~Loss~~The ~~Per~~exercise ~~Common~~price range for the ~~Share~~excluded 28,000 shares was $0.80 - $6.50

~~Basic earnings/loss~~During ~~per~~the ~~common~~three month ~~share~~period isended ~~computed~~September by30, ~~dividing~~2005, ~~net~~options ~~income/loss~~to bypurchase ~~the weighted~~5,472 ~~average~~shares ~~number~~ of common ~~shares~~stock ~~outstanding~~were ~~for~~included in the ~~period. Diluted~~computation ~~earnings~~of ~~per~~the ~~common~~weighted ~~share~~average isnumber ~~computed~~of byshares ~~dividing~~outstanding ~~net~~because ~~income~~these byoptions ~~the~~had ~~sum~~exercise ofprices ~~the~~less ~~weighted~~than the average ~~number~~market value of the Company’s common ~~shares~~ ~~outstanding~~stock for the three month period ended ~~plus~~September ~~all~~30, ~~potentially~~2005. ~~dilutive~~The ~~securities, such~~exercise asprice ~~stock~~for ~~options~~these included shares was $1.56.

~~For~~During the ~~three months~~nine month period ended September 30, 2006 and the six month period ended September 30, 2005, aoptions ~~total~~to ofpurchase 528,~~472~~000 ~~stock~~and ~~option~~50,875 shares respectively, of common stock were not included in the ~~weighted~~computation ~~average~~of ~~number~~diluted net loss per share since their inclusion would be antidilutive as a result of ~~common~~the ~~shares~~net ~~outstanding~~loss ~~calculation~~incurred. ~~because~~The ~~these~~exercise ~~shares~~price ~~had~~range ~~exercise~~for ~~prices~~the ~~less~~excluded ~~than~~28,000 shares for the ~~average~~nine ~~market~~month ~~value~~period ended ofSeptember 30, 2006 was $0.80 - $6.50. The exercise price range for the ~~Company’s~~excluded ~~common~~50,875 ~~stock~~shares for the ~~three~~six month period ended September 30, 2005 was $1.56 - $13.42.

~~During~~Loss per share is not calculated for the ~~six~~predecessor three month period ended ~~September~~March 3031, 2005, since ~~options~~the topredecessor ~~purchase~~did ~~50,875~~not ~~shares~~comprise ofa ~~common stock~~stand-alone ~~were~~legal ~~not~~group ~~included~~but inwas ~~the computation~~ part of ~~diluted~~a ~~net~~larger ~~loss~~entity, ~~per~~Highbury ~~share~~House, ~~since their~~with ~~inclusion~~no ~~would~~outstanding beshares ~~antidilutive~~of asits aown ~~result~~on which ofearnings ~~the~~per ~~net~~share ~~loss~~could ~~incurred.~~be ~~The~~calculated. ~~exercise~~Furthermore, ~~price~~the ~~range~~acquisition ~~for~~was ~~the~~financed ~~excluded~~by ~~50,875~~cash ~~shares~~rather ~~was~~than ~~$1.56~~the issuance -of ~~$13~~common shares.~~42.~~

Earnings/loss per share is not calculated for the predecessor periods since the predecessor did not comprise a stand alone legal group but was part of a larger entity, Highbury House, with no outstanding shares of its own on which EPS could be calculated8. ~~Furthermore, the acquisition was financed by cash rather than the issuance of common shares.~~ Inventory

9As of the periods indicated, inventory consisted of the following:

8. Comprehensive (Loss) Income:

	September 30, 2006		December 31, 2005
Raw Materials	$	101,254	$	83,843
Finished goods	464,980		189,627
Total	$	566,234	$	273,470

~~The~~9. Provisions ~~following~~for ~~table shows the computation of comprehensive (loss) income:~~Dilapidation

							Predecessor
	Ergo			Ergo			Nexus Media			Nexus Media			Nexus Media
	Three months ended September 30, 2005			Six months ended September 30, 2005			Three months ended March 31, 2005			Three months ended September 30, 2004			Nine months ended September 30, 2004
							As restated
Net income (loss)	$	699,217		$	(460,414	)	$	(926,480	)	$	316,559		$	480,120
Other comprehensive income (loss):
Foreign currency translation adjustments	(124,524		)	(1,187,546		)	(345,980		)	(82,650		)	(670,812		)
Total comprehensive income (loss)	$	574,693		$	(1,647,960	)	$	(1,227,460	)	$	233,909		$	(192,692	)

At December 31, 2005, a dilapidation provision of $301,000 (£175,000) had been recognized within accounts payable and accrued expenses as a result of Highbury House being placed into receivership, in relation to a building occupied by Nexus prior to acquisition. The Company ceased use of this facility prior to acquisition and this amount was reflected in the purchase price allocation. In the quarter ended June 30, 2006, following receipt of a more detailed estimate of dilapidation costs from the landlord’s surveyor, a further $594,000 (£325,000) has been recognized in the income statement, as part of general and administrative expense, to reflect the Company’s best estimate of amounts payable in accordance with FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities. On October 27, 2006, the Company agreed to a final settlement of the dilapidations with the landlord in the amount of $374,320 (£200,000) and this amount was paid to the Landlord on that date. Consequently an amount of $562,515 (£300,000) was recorded in the income statement as a reduction to general and administrative expenses in the three-month period ended September 30, 2006.

910. ~~Income~~ Comprehensive ~~Taxes~~loss:

The ~~provision~~following ~~for~~table ~~taxes based on income for~~ shows the ~~three~~computation ~~and six months ended September 30, 2005 was computed in accordance with Interpretation No. 18~~ of ~~Accounting~~comprehensive 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.loss:

Income tax expense was $0 for the three month period ended September 30, 2005 and $449,614 for the six month period ended September 30, 2005. The six month expense of $449,614 was principally the result of a valuation allowance being recorded against the deferred tax asset in Nexus Media that was recorded as of March 31, 2005 and 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.

	Ergo		Ergo			Ergo			Ergo			Predecessor Nexus Media
	Three months ended September 30, 2006		Three months ended September 30, 2005			Nine months ended September 30, 2006			Six months ended September 30, 2005			Three months ended March 31, 2005

Net income (loss)	$	69,530	$	699,217		$	(2,915,559	)	$	(460,414	)	$	(1,400,399	)
Other comprehensive income (loss):
Foreign currency translation adjustments	586,793		(124,524		)	1,890,788			(1,187,546		)	(345,980		)
Total comprehensive income (loss)	$	656,323	$	574,693		$	(1,024,771	)	$	(1,647,960	)	$	(1,746,379	)

10~~. Commitments and Contingencies~~

The ~~Company’s~~financial statements ~~subsidiary,~~of Nexus Media, ~~has~~with ~~subleased~~a ~~two~~functional ~~properties~~currency inof Pounds Sterling are translated into U.S. dollars using the ~~United~~current ~~Kingdom~~rate method. InAccordingly, assets and ~~the~~liabilities ~~event~~are oftranslated aat ~~default~~period-end onexchange ~~the~~rates ~~lease~~while revenue, expenses and cash flows are translated at the ~~Company~~period’s ~~would~~weighted ~~have~~average aexchange ~~contingent~~rates. ~~liability~~Adjustments resulting from these translations are accumulated and reported as a component of ~~£247,000~~other ~~(approximately~~comprehensive ~~$437,000~~income (loss) in stockholders’ equity.

11. ~~Recently~~Income ~~Issued But Not Yet Adopted Accounting Pronouncements~~Taxes

InThe ~~December 2004,~~provision ~~the~~for ~~FASB~~taxes ~~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~~income ~~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~~three ~~allowed by SFAS No. 123 (R)~~ and ~~will~~nine ~~adopt~~month itperiods ~~in the~~ended ~~first~~September ~~quarter~~30, of 2006. ~~The~~were ~~financial~~computed ~~statement impact is not expected to be materially different from that shown~~ in ~~the~~accordance ~~existing~~with ~~pro~~Interpretation ~~forma disclosure required under the original SFAS~~ No. ~~123.~~ ~~The~~18 ~~issuance~~ of ~~additional stock~~ ~~options~~Accounting inPrinciples ~~the~~Board ~~future~~Opinion ~~will~~No. ~~cause SFAS 123(R) to have a greater impact on our financial statements~~28.

10Income tax (benefit) was ($127,290) for the three month period ended September 30, 2006 and none for the three month period ended September 30, 2005. Income tax (benefit) expense was ($353,536) for the three month period ended March 31, 2005 (Predecessor) and $97,529 for the nine month period ended September 30, 2006. The benefit of $353,536 for the period ended March 31, 2005 is a UK tax benefit for Nexus Media.

12. ~~Restatement of~~ Recent ~~Financial~~Accounting ~~Statements~~Pronouncements

OnIn May ~~November 14,~~ 2005, the ~~Company~~FASB ~~concluded~~issued ~~that~~SFAS ~~the~~154, Accounting Changes and ~~Company’s~~Error ~~previously~~Corrections, ~~issued~~which requires retrospective application to the financial statements asof ~~filed~~prior periods to reflect changes in ~~its~~accounting principle ~~Form 10-Q~~and redefines the term “restatement” as the revising of previously ~~for~~issued financial statements to reflect the ~~quarterly~~correction ~~period~~of ~~ended~~an ~~June 30~~error. Under retrospective application, ~~2005~~the ~~including~~new ~~information~~accounting ~~referenced~~principle is applied as at the ~~below~~beginning ~~should~~of nothe ~~longer~~first beperiod ~~relied~~presented ~~upon~~as ~~because~~if that principle had always been used. The cumulative effect of ~~errors~~the change is reflected in ~~those~~the ~~financial~~carrying value of ~~statements~~assets and ~~should~~liabilities beas ~~restated~~at the beginning of the first period presented and the offsetting adjustments are recorded to ~~reflect~~opening ~~necessary~~retained earnings. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal ~~adjustments~~years beginning after December 15, 2005. The ~~adjustments~~adoption doof SFAS 154 did not have ~~affect~~a ~~the~~material ~~Company’s~~effect ~~reported~~on ~~revenues,~~our ~~its~~consolidated ~~cash~~financial ~~flows~~position, orresults ~~its~~of ~~cash/liquidity~~operations ~~position~~or cash flows.

In June ~~accordance~~2006, ~~with~~the Financial ~~accounting~~Accounting ~~principles~~Standards ~~generally~~Board ~~accepted in~~(FASB) ~~the~~issued ~~United~~FASB Interpretation ~~States~~(FIN) ~~of America~~48, ~~certain~~“Accounting ~~sales~~for ~~and~~Uncertainty ~~marketing~~in ~~costs~~Income ~~pertaining~~Taxes”. toFIN ~~future~~48 ~~events~~clarifies ~~and~~the ~~publications~~accounting ~~are~~for ~~required~~uncertainty toin beincome ~~expensed.~~taxes ~~However,~~recognized ~~during~~in ~~fiscal~~an ~~year~~enterprise’s ~~2004~~financial ~~and~~statements ~~fiscal~~in ~~year~~accordance ~~2005~~with ~~only~~FASB ~~some~~Statement of ~~these costs were expensed in~~ ~~the~~Financial ~~proper~~Accounting ~~reporting~~Standards ~~periods by the business-to-business publishing division~~ (~~referred~~SFAS) to109, ~~herein~~“Accounting asfor ~~“Nexus~~Income ~~Media~~Taxes”). This ~~recently~~Interpretation ~~acquired~~defines by the ~~Company~~minimum ~~from Highbury~~recognition ~~House~~threshold ~~Communications plc,~~ a ~~company~~tax ~~organized~~position ~~under the laws of the~~is ~~United~~required ~~Kingdom~~to ~~(“Highbury~~meet ~~House”). Nexus Media~~before ~~consisted~~being ofrecognized ~~eight~~in ~~wholly-owned subsidiaries of Highbury House, which before~~ the ~~acquisition had not prepared quarterly separate or consolidated~~ financial statements. ~~The errors arose primarily because of certain sales and~~ FIN ~~marketing~~48 ~~costs~~is ~~relating~~effective tofor ~~future~~fiscal ~~events~~years orbeginning ~~publications~~after ~~during~~December 15, ~~fiscal year~~2006. ~~2004~~The ~~and~~Company ~~fiscal~~is ~~year~~currently ~~2005~~evaluating bythe ~~Nexus~~effect ~~Media~~that ~~were~~the ~~deferred~~adoption toof ~~and~~FIN ~~expensed~~48 inwill ~~subsequent periods when they should~~ have ~~been~~on ~~expensed~~its ~~during~~financial ~~the~~position ~~period~~and ~~in which~~results ~~they~~of ~~were incurred~~operations.

~~The~~In ~~Company~~September ~~determined~~2006, the SEC issued Staff Accounting Bulletin No. 108, Section N to Topic 1, Considering the Effects of Prior Year misstatements when Quantifying misstatements in Current Year Financial Statements (SAB 108). SAB 108 requires the evaluation of prior-year misstatements using both the balance sheet approach and the income statement approach. In the initial year of adoption should either approach result in quantifying an error that is material in light of quantitative and qualitative factors, SAB 108 guidance allows for a one-time cumulative-effect adjustment to beginning retained earnings. In years subsequent to adoption, previously undetected misstatements deemed material shall result in the ~~errors~~restatement ~~resulted~~of previously issued financial statements in accordance with FAS 154. SAB 108 is effective for the ~~following adjustments:~~Company on December 31, 2006 with earlier adoption encouraged. Management is currently reviewing SAB 108 to determine the impact and materiality of its adoption to the Company.

~~• the understatement~~13. Financial ofinformation ~~cost~~ of ~~revenues and the overstatement of net income before~~ ~~tax~~Ergo ofScience ~~Nexus~~prior ~~Media~~to ~~of $169,875; and~~ the ~~overstatement~~acquisition of ~~net income and total assets of~~ Nexus Media ~~of $118,913, for the six month period ended June 30, 2004;~~

~~• the~~The ~~overstatement~~acquisition of ~~cost~~Nexus ofMedia ~~revenues~~by ~~and~~Ergo ~~the~~is ~~understatement~~being oftreated ~~net~~as ~~income~~a ~~before~~purchase business ~~tax~~combination offor ~~$126,213;~~accounting ~~and~~purposes. We have nonetheless included the ~~overstatement~~condensed consolidated financial information of Ergo prior to the ~~net~~acquisition ~~loss~~of ~~and~~Nexus Media including the ~~understatement of~~condensed consolidated balance sheet at March 31, 2005, the condensed ~~total~~consolidated ~~assets~~statement of ~~Nexus~~operations ~~Media~~and the condensed consolidated statement of ~~$88,348,~~cash flows for the three month period ended March 31, 2005~~; and~~.

• the understatement of cost of revenues and the overstatement of net income before tax of the Company of $116,445; and the understatement of net loss and the overstatement of total assets of the Company of $109,477, for the three month period ended June 30, 2005.11

~~The following tables sets forth the effects of the restatement adjustments discussed above on the~~ Condensed Consolidated ~~Statement~~Balance ~~of Operations for Nexus Media (Predecessor) for the three months ended March 31, 2005:~~Sheet

		Nexus Media			Nexus Media
	March 31, 2005
		Three months ended March 31, 2005			Three months ended March 31, 2005
ASSETS
		As Previously Reported			As Restated
Current assets:
Net revenues		$	6,584,877		$	6,584,877
Cash and cash equivalents	$	26,334,449	(2)
Cost of revenues		6,048,974			5,922,761
Prepaid and other current assets	61,878
Gross profit		535,903			662,116
Capitalized acquisition costs	640,604		(1)
Operating expenses:
Total current assets	27,036,931
General and administrative		1,648,391			1,648,391
Total assets	$	27,036,931
Amortization of intangibles		52,951			52,951
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total operating expenses		1,701,342			1,701,342
Current liabilities:
Net operating loss		(1,165,439		)	(1,039,226		)
Accounts payable and accrued expenses	$	826,503	(1)
Other Income:
Income taxes	94,000
Interest income		69,971			69,971
Total current liabilities	920,503
Net loss before taxes		(1,095,468		)	(969,255		)
Stockholders’ equity:
Income tax expense (benefit)		(80,639		)	(42,775		)
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 (liquidation preference of $12,407,054)	4,306,520
Net loss		$	(1,014,829	)	$	(926,480	)
Common stock, $.01 par value, 50,000,000 shares authorized; 7,149,578 shares issued and 5,813,856 outstanding at March 31, 2005	71,496
Additional paid-in capital	111,880,321
Cumulative dividends on preferred stock	(2,296,953		)
Accumulated deficit	(85,427,299		)
Treasury stock (at cost), 1,335,722 shares at March 31, 2005	(2,417,657		)
Total stockholders’ equity	26,116,428
Total liabilities and stockholders’ equity	$	27,036,931

In addition, the Company expects to file and amendment to its quarterly report on Form 10-Q for the quarter ended June 30, 2005 (the “Second Quarter 10-Q”) to more fully amend and restate the financial statements previously filed in the Second Quarter.12

11Condensed Consolidated Statement of Operations

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

	For the three months ended March 31, 2005
Operating expenses:
General and administrative	$	180,049
Net operating loss	(180,049		)
Other Income:
Interest	136,630
Foreign exchange gain	198,403		(2)
Net income	$	154,984
Net income per common share:
Basic and Diluted	$	0.03
Weighted average common shares outstanding:
Basic and Diluted	5,813,856

Management’s discussionCondensed andConsolidated analysisStatement of financialCash condition and results of operations should be read in conjunction with the historical financial statements of the Company, included in its Annual Report on Form 10-K for the year ended December 31, 2004, and of Nexus Media, included in the Company’s Current Report on Form 8-K/A filed on June 17, 2005. The results of operations may change materially from the historical results of operations reflected in the historical financial statements of Ergo or Nexus Media.Flows

Overview

	Three Months Ended March 31, 2005
Cash flows from operating activities:
Net income	$	154,984
Adjustments to reconcile net income to cash used in operating activities:
Foreign exchange gain	(198,403		)
Changes in operating assets and liabilities:
Prepaid and other current assets	(51,341		)
Accounts payable and accrued expenses	(205,203		)
Net cash used in operating activities	(299,963		)
Cash flows from investing activities:
Payments for acquisition costs	(17,181		)
Net cash used in investing activities	(17,181		)
Net decrease in cash and cash equivalents	(317,144		)
Effect of exchange rates on cash and cash equivalents	198,403
Cash and cash equivalents at beginning of period	26,453,190
Cash and cash equivalents at end of period	$	26,334,449

~~Ergo Science Corporation~~ (~~the “Company” or “Ergo”~~1) ~~acquired~~ These ~~the~~amounts ~~business to business publishing division (“Bcom” or “Nexus Media~~differ ~~Communications”~~from orthose ~~“Nexus~~disclosed ~~Media”)~~on ofForm ~~Highbury~~10-Q ~~House~~for ~~Communications plc (“Highbury House”), a company organized under~~ the ~~laws~~period ofended ~~the~~March ~~United Kingdom on April 1~~31, 2005. ~~The purchase price of GBP 12.5 million (approximately $23.395~~as ~~million)~~certain ~~was~~costs ~~subject~~were toless athan ~~£1.041~~originally ~~million~~accrued ~~(approximately~~when ~~$1.958 million) working capital adjustment. At closing therefore,~~ the ~~Company~~acquisition paid Highbury House GBP 11.459 million (approximately $21.555 million). After completion the final working capital amount was confirmed and an additional working capital adjustment was made to the Company in the amount of ~~GBP 464,000 (approximately $873,000),~~Nexus ~~which~~Media we received in the third quarter. As of September 30, 2005, the Company had paid a total $21,201,216 related to the acquisition, which includes $519,000 in capitalized acquisition costs. The Acquisition was ~~funded by the Company with its own cash and cash equivalents~~finalized. Nexus Media, comprising eight wholly-owned 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.

~~Nexus Media’s business includes: 13 trade names~~ (~~including:~~2) These ~~Checkout;~~amounts ~~Electrical~~differ ~~Times;~~from ~~Independent~~those ~~Grocer;~~previously ~~The~~disclosed ~~Motor~~on ~~Ship;~~Form ~~World~~10-Q ~~Travel~~for ~~Guide;~~the ~~and~~period ~~Motor Trader);~~ended ~~150~~March ~~domain names (including: columbusguides.com; groweroftheyear.com;~~31, ~~harpers-wine.com;~~2005 ~~motorship.com;~~due ~~motortrader.com;~~to ~~travel-guide.com;~~the ~~and worldfish.com);~~correction ~~approximately~~of 45an ~~magazine~~error ~~titles~~in ~~(including:~~order ~~Motor~~to ~~Trader; World~~recognize ~~Fishing~~a ~~Magazine;~~foreign ~~Export Times; Checkout; World Travel Guide; Television~~exchange ~~World;~~gain ~~and~~in ~~Electronics~~the ~~World);~~amount ~~and~~of ~~approximately~~$198,403 35on ~~exhibitions~~non ~~(including:~~US ~~The International~~dollar ~~Wine~~denominated &cash ~~Spirit Competition; The Retail Industry Awards;~~balances ~~Quality~~established ~~Food~~shortly ~~and~~before ~~Drinks~~the ~~Awards;~~acquisition ~~and~~of ~~Europe~~Nexus ~~Power Conference and Exhibition)~~Media.

At Ergo’s Annual Meeting of Stockholders held on October 15, 2001, stockholders approved the imposition of transfer restrictions on its 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.13

~~Effective May~~ITEM 18, 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 Company2. MANAGEMENT’sS ~~ability~~DISCUSSION toAND ~~retain~~ANALYSIS ~~the~~OF ~~Tax~~FINANCIAL ~~Benefits~~CONDITION isAND ~~subject~~RESULTS toOF 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.OPERATIONS

AsManagement’s discussion aand analysis of financial condition and results of operations should ~~result~~be read in conjunction with the historical financial statements of the ~~Determination~~Company and Nexus Media, ~~the~~included ~~Board~~in ~~modified~~its Annual Report on Form 10-K for the ~~text~~year ofended December ~~Article~~31, ~~XII~~2005. ~~(1)~~The results of operations may change materially from the historical results of operations reflected in the ~~Certificate~~historical tofinancial statements ~~read~~of asErgo ~~follows:~~or Nexus Media.

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 Section 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 noOverview

12Ergo Science Corporation (the “Company” or “Ergo”), through its indirect wholly owned subsidiaries Nexus Media Communications Limited, Nexus Business Media Limited, Nexus Commercial Media Limited, Columbus Travel Publishing Limited, Harpers Wines & Spirits Limited, The International Wine and Spirit Competition Limited, Nexus Business Limited, and Nexus Business Communications Limited (collectively “Nexus Media Communications” or “Nexus Media” or the “Predecessor”), provides business to business publishing information across a diverse range of sectors including printed and web-based magazines, data services and directories, staging exhibitions, conferences and award ceremonies. The Company’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 50 printed magazines and directories (including: Motor Trader; Harpers Wines & Spirits, The Grower, Independent Retail News, World Fishing; The World Travel Guide and Electrical Review); and approximately 30 Events including exhibitions, awards evenings and conferences such as the International Wine & Spirit Competition; the Undersea Defence Technology Conference & Exhibition; the Motor Trader Awards and the Grower of the Year Awards.

~~Tax~~From ~~Benefits~~our incorporation ~~may~~through beMarch ~~carried forward~~2001, ~~unless~~we were engaged in the ~~Board~~development of ERGOSET® tablets for the treatment of ~~Directors~~type ~~shall~~2 ~~fix~~diabetes. anIn ~~earlier~~March or2001, ~~later~~we decided ~~date~~that inthe ~~accordance~~next ~~with~~phase ~~Section~~of 5the development of ~~this~~ ~~Article~~ERGOSET® ~~XII~~would ~~(the~~be ~~date~~better undertaken onby ~~which~~a ~~the~~company ~~restrictions~~that ofhas ~~this~~more ~~Article~~experience ~~XII~~with ~~expire~~human drug development and ~~hereunder~~more isresources ~~sometimes~~for ~~referred~~regulatory toapproval ~~herein~~and asmarketing ~~the~~than ~~“Expiration~~we ~~Date”)~~do.

~~The~~On November ~~day~~24, ~~after~~2003 ~~the~~we ~~sixth~~sold ~~anniversary~~all of ~~the~~our ~~effective~~scientific and research assets and certain ~~date~~other intellectual property assets to Pliva d.d., a company organized under the laws of Croatia (“Pliva”). At the ~~merger~~time isof ~~October~~the 20sale, ~~2007~~we received $5,498,000 in cash. ~~Additionally~~In addition, Pliva has assumed our future obligations under the ~~Board~~royalty agreement ~~extended~~with Louisiana State University (“LSU”). If Pliva is successful in obtaining approval from the Food and Drug Administration (“FDA”) they would be ~~Expiration~~required ~~Date~~to ~~until~~make ~~October~~certain 20royalty payments to LSU based on sales on the potential product. Also as part of the agreement, ~~2007~~Pliva has agreed to make payments to one of our wholly-owned subsidiaries, Ergo Texas, to cover certain payments required to be made in the event that ERGOSET® or another specified drug is approved by the FDA. Ergo Texas may under some circumstances remain liable for some payments but they would have legal remedies available to them against Pliva.

On April ~~October 24~~1, 2005, J.Ergo ~~Warren Huff~~acquired ~~resigned~~the ~~from~~business ~~the~~to ~~Board~~business ofpublishing ~~Directors~~division of Highbury ~~the~~House ~~Company~~Communications plc (“Highbury House”), ~~and~~a ~~from~~company ~~the~~organized ~~Audit~~under ~~Committee~~the ~~and~~laws of the ~~Compensation~~United ~~Committee~~Kingdom. ofThe ~~the~~final ~~Board~~purchase ofprice ~~Directors~~was of$20,918,000, ~~the~~which ~~Company~~included $640,000 in capitalized acquisition costs. ~~Mr.~~ ~~Huff~~The ~~had~~acquisition nowas ~~disagreements~~funded ~~with~~by the Company orfrom its ~~management~~own ~~relating~~cash toand ~~the~~cash ~~Company’s operations, policies or practices~~equivalents.

OnAnnouncement ~~October 25, 2005, the Board~~ of ~~Directors~~Reverse ~~of the Company elected Ling Kwok to the Board of Directors~~Stock ofSplit ~~the Company to fill the vacancy left by Mr. Huff’s resignation. Mr. Kwok has served as Vice President, Corporate Development of the Company since December 1, 2003.~~Transaction

~~Risk~~On ~~Factors~~October 16, 2006, the Company announced that its board of directors had approved a 1-for-200 reverse stock split of the Company’s common stock, par value $0.01 per share (“common stock”), to be followed immediately by a 200-for-1 forward stock split of the Company’s common stock (collectively, the “transaction”). On October 18, 2006, the Company filed a Schedule 13e-3 and a preliminary proxy statement related to the transaction with the Securities and Exchange Commission (“SEC”).

~~The~~If ~~market~~the ~~for~~transaction is ~~Nexus~~approved ~~Media~~by the Company’s ~~products~~stockholders and implemented, the Company expects ~~services~~to ishave ~~competitive~~fewer than 300 stockholders of record of its common stock. At that point, the Company intends to terminate registration of its common stock, cease to be a reporting company under the Securities Exchange Act of 1934, as amended, and suspend the Company’s obligations to file annual and periodic reports and make other filings with the SEC. In connection with this deregistration, the common stock would no longer be eligible for quotation on the over-the-counter bulletin board maintained by the NASD, and would only be quoted on the “pink sheets.”

~~The~~Asset ~~competition~~Disposition 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.Plan

~~Within each~~The ~~particular~~Company’s ~~industry~~management ~~sector,~~has ~~Nexus~~discussed ~~Media~~the ~~also~~possibility ~~competes~~of ~~with~~disposing aof ~~large~~some ~~number~~ of its ~~small~~assets toin ~~medium-sized~~the ~~firms~~future. The ~~While~~Company ~~most~~would retain ~~small~~the toassets ~~medium-sized~~that ~~firms~~it ~~operate~~considers ~~in a~~to ~~single~~have ~~geographic~~the ~~market~~potential orfor ~~industry sector~~growth, inand ~~some~~would focus ~~cases,~~ its ~~competitors operate~~efforts inon ~~several~~the ~~geographic~~development ~~markets~~of ~~and/or~~such ~~industry sectors~~assets. Management ~~Its~~is ~~trade~~considering ~~shows and~~disposing ~~conferences~~of ~~compete with trade associations and, in several markets, with~~assets ~~exposition~~that ~~hall~~either ~~owners~~(i) ~~and~~are ~~operators.~~mature ~~Its publications typically have between two~~ and ~~five~~declining ~~direct~~in ~~competitors~~revenue ~~that~~or ~~target~~(ii) ~~the~~have ~~same~~a ~~industry sector, and it~~market ~~also~~position ~~has~~so ~~many~~small ~~indirect competitors~~ that ~~define~~no ~~niche~~material ~~markets~~upside ~~differently~~exists ~~than it~~for ~~does~~the ~~and~~Company ~~thus~~in ~~may~~the foreseeable ~~provide alternatives for readers and/or advertisers~~future.

~~Nexus~~Employee Announcement ~~Media~~in ~~has~~the ~~not previously acted as a stand-alone company.~~UK

~~Prior~~On October to18, ~~April 1~~2006, ~~2005,~~ ~~Nexus~~in ~~Media~~accordance ~~had~~with noUK ~~history of operating as a stand-alone company~~law, ~~and~~Nexus itMedia ~~may~~made bean ~~unable to make the changes~~internal ~~necessary~~announcement to ~~operate~~all asemployees aconcerning ~~stand-alone~~the ~~company,~~fact orthat itthe ~~may~~management ~~incur greater costs as~~is acurrently ~~stand-alone~~in ~~company~~discussions ~~that~~regarding ~~may~~a ~~cause~~possible ~~its~~restructuring ~~profitability~~of tothe ~~decline.~~ Nexus Media ~~had been operated by Highbury~~ ~~House as a division of its broader publishing organization rather than as a separate stand-alone company~~entities. ~~Highbury House assisted~~ Nexus Media byannounced ~~performing various corporate functions, including~~that ~~public~~there ~~relations,~~is ~~employee~~a ~~relations,~~possibility ~~financing~~that ~~and~~up ~~legal and tax functions. Following the Acquisition, Highbury House had no obligation~~ to ~~provide~~43 ~~these~~positions ~~functions~~will tobe ~~Nexus Media. If~~made ~~Nexus Media is unable to~~redundant, ~~implement~~depending ~~own~~on ~~systems~~the ~~and~~outcome ~~business~~of ~~functions~~management’s orconsiderations ifregarding itthe ~~does not have agreements~~potential ~~with~~sale ~~other providers~~ of ~~these~~certain ~~services,~~titles ~~Nexus Media may not be able to effectively operate its business~~ and ~~its profitability may decline~~events.

~~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.~~14

~~Nexus~~Results 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.Operations

13The Company’s main operations, Nexus Media, are based in the U.K. and denominated in Pounds Sterling with a functional currency of Pounds Sterling which are translated into U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated at period-end exchange rates while revenues, expenses and cash flows are translated at the period’s average exchange rates. Therefore changes in the average exchange rates used to calculate revenues, expenses and cash flows will impact the comparisons of statement of operation results. The average exchange rate used was 1.8751 and 1.7847 for the three months ended September 30, 2006 and 2005 respectively. The effect of foreign currency exchange fluctuations on each area of the income statement has been separated out in the review of the results of operations, below, in order to explain the underlying movements.

~~Further terrorist attacks and~~For ~~continued geopolitical concern (including conflict in~~ the ~~Middle~~Three ~~East)~~Months ~~may significantly~~Ended ~~affect~~September ~~Nexus Media’s future results of operations or financial condition~~30, ~~whether~~2006 ~~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.~~2005

~~Nexus~~Revenues ~~Media~~decreased ~~depends~~to on$9,311,000 ~~securing~~for ~~desirable~~the ~~dates~~three-month period ended September 30, ~~and~~2006 ~~locations~~from $10,907,000 for ~~its~~the ~~trade~~three-month ~~shows~~period ended September 30, 2005. The decrease of approximately $1,596,000 was primarily the result of increases in internet-related product revenues of $152,000 and ~~conferences~~foreign currency exchange fluctuations of $552,000, ~~which~~offset itby ~~may~~decreases ~~not~~in beprint ~~able~~advertising torevenues of ~~secure~~$178,000 and events revenue of $2,122,000.

The ~~date~~decline ~~and~~in ~~location~~advertising revenue of a$178,000 ~~trade~~was ~~show~~primarily orthe aresult ~~conference~~of ~~can~~a ~~impact~~decrease ~~Nexus~~in ~~Media~~the ~~profitability~~number ~~and~~of ~~prospects. The~~advertisements ~~market~~in ~~for desirable dates and locations~~our ispublications ~~highly competitive. If Nexus Media cannot secure desirable dates~~ and ~~locations~~not ~~for~~the ~~its~~result ~~trade shows and conferences, profitability and future prospects would suffer, and its financial condition and results~~ of ~~operations~~price ~~would~~related ~~be materially adversely affected~~issues. In ~~general,~~The Nexus Media ~~maintains~~Communications ~~multi-year~~advertising ~~reservations~~revenue ~~for~~was ~~its~~approximately ~~trade shows and conferences~~4. ~~Consistent~~1% ~~with~~lower ~~industry~~in ~~practice, it does~~2006 ~~not~~compared ~~pay~~to ~~for~~the ~~these~~same ~~reservations,~~period ~~and~~in ~~these~~2005. ~~reservations~~Management ~~are~~has ~~not~~been ~~binding~~transitioning on the core ~~facility~~business ~~owners~~towards ~~until~~revenue ~~Nexus~~related ~~Media~~to ~~executes~~events, asponsorships ~~contract~~and ~~with~~on-line ~~the owner~~advertising. ~~Nexus~~ In ~~Media~~addition ~~typically~~management ~~signs~~has ~~contracts~~identified ~~that~~key ~~guarantee the~~publications ~~right~~that towill ~~venues~~be ~~or dates~~ targeted for ~~only one year~~growth. ~~Therefore,~~ ~~multi-year~~Management ~~reservations~~has ~~may~~ not ~~lead~~yet toincreased ~~binding~~revenues ~~contracts with~~enough ~~facility~~from ~~owners. In addition,~~its ~~because trade shows and conferences are held on pre~~non-~~scheduled~~traditional ~~dates~~areas atto ~~specific locations,~~cover the ~~success~~decreases ofit ahas ~~particular~~sustained ~~trade~~from ~~show or conference depends upon~~its ~~events~~traditional ~~outside~~advertising ~~Nexus Media’s control, such as natural catastrophes, labor strikes~~ and ~~transportation~~circulation ~~shutdowns~~revenue bases.

~~Nexus~~Events ~~Media’s~~revenue ~~trade~~decreased ~~shows~~by approximately $2,122,000 ~~conferences~~in total primarily due to timing differences. The Icelandic Fisheries Exhibition, which takes place once every three years and last took ~~publishing~~place in September 2005, resulted in a revenue shortfall of $2,263,000 in September 2006. This was offset by revenues ~~vary~~from ~~due~~the toElectrical Industry Awards which took place in the ~~movement~~three month period ended September 30, 2006 with revenues of $111,000 as compared to the prior year when this annual ~~events~~event orwas held ~~publication~~during the three months ended December 31, 2005. There were also increased ~~mailing~~revenues ~~dates~~from ~~and~~the European Conference on Optical Communication, with revenues in the ~~timing~~three-month period ended September 2006 of ~~its~~approximately ~~customers’~~$1,768,000 compared ~~product~~to ~~launches~~revenues in the three-month period ended September 30, 2005 of approximately $1,671,000. In contrast the Retail Awards declined from approximately $553,000 in the three-month period ended September 30, 2005 to $486,000 in the three-month period ended September 30, 2006.

~~Nexus~~Internet ~~Media’s~~related ~~trade~~product ~~shows, conferences~~revenues ~~and~~have ~~publishing~~increased ~~revenues~~by approximately ~~are seasonal~~$152,000. ~~due~~This ~~primarily~~increase towas ~~the~~approximately ~~timing of~~65% ~~its~~related ~~large~~to ~~trade~~on-line advertising ~~shows~~ and ~~conferences~~35% ~~and~~content ~~the~~licensing. ~~mailing~~The ~~dates~~content ofand ~~its~~presentation ~~magazines~~for ~~and~~Internet ~~industry~~related ~~directories.~~products ~~Because~~has ~~event~~been ~~revenues~~improved ~~are recognized when a particular event is held~~ and ~~publication~~has ~~revenues~~resulted ~~are recognized~~ in ~~the~~an ~~month~~increase in ~~publications~~Internet ~~are mailed~~traffic, ~~Nexus~~which ~~Media~~has ~~may~~resulted ~~also experience fluctuations~~ in ~~quarterly~~ ~~revenues~~increased ~~based on the movement of annual events or mailing dates from one quarter to another~~revenues.

InCost of ~~addition,~~Revenues include ~~Nexus~~the ~~Media’s~~cost ~~trade show~~of producing and ~~conference~~dispatching ~~revenues~~publications, ~~may~~which ~~fluctuate~~includes paper, ~~from~~printing ~~period~~and todistribution ~~period~~costs ~~based~~as onwell as the ~~spending~~ ~~patterns~~cost of ~~its~~the ~~customers.~~staff ~~Many~~(and external ofcontractors) ~~its~~that ~~large~~write ~~customers~~and ~~concentrate~~produce ~~their trade~~the ~~show~~editorial ~~participation~~content ~~around~~of ~~major product launches~~our publications. For ~~Because~~events, itcosts ~~cannot~~of ~~always~~revenues ~~know~~include orthe ~~predict~~cost ~~when~~of ~~its~~the ~~large~~venue, ~~customers~~staging, ~~intend~~furniture, torenting ~~launch new products~~equipment, itcatering isstaff ~~difficult~~costs toand ~~anticipate~~the ~~any~~direct ~~related~~and ~~fluctuations~~incremental incost ~~trade~~of ~~show~~obtaining exhibitors and ~~conference~~ ~~revenues~~delegates.

~~Nexus~~Cost ~~Media~~of ~~depends~~Revenues indecreased ~~part~~to on$6,530,000 ~~new~~for ~~product~~the ~~introductions~~three-month period ended September 30, ~~and~~2006 from $7,657,000 for the ~~process~~three-month period ended September 30, 2005. The decrease of ~~researching~~approximately $1,127,000 ~~developing~~was a direct result of the core business transitioning towards events, ~~launching~~sponsorships and on-line advertising. This has resulted in costs decreases in: the cost of producing and distributing publications of $73,000, subscription and ~~establishing~~mailing ~~profitability~~list ~~for~~costs aof ~~new~~$111,000 and personnel costs of $1,004,000. Internet-related costs were lower by approximately $28,000 due to the timing of costs in 2005 and event orcosts ~~publication~~were islower ~~inherently~~by ~~risky~~approximately $457,000 primarily as a result of the timing differences discussed above. These decreases were offset by increases in promotion costs for the key publications targeted for growth of $159,000 and ~~costly~~foreign currency exchange fluctuations of $387,000.

~~Nexus~~Gross ~~Media’s~~profit ~~success~~margin ~~depends~~remained ~~in part~~at ~~upon~~30% ~~its~~of ~~ability~~revenue tofor ~~monitor~~the ~~rapidly~~three-month ~~changing~~periods ~~market trends and to adapt~~ended ~~events~~September ~~and~~30, ~~publications~~2006 ~~to meet the evolving needs of existing~~ and ~~emerging target audiences~~2005. ~~Future~~Gross ~~success~~profit ~~will~~margin ~~depend~~has indecreased ~~part~~by on$469,000 ~~Nexus Media’s ability~~due to ~~continue~~decreases toin ~~adapt~~revenues ~~existing~~partly ~~events~~offset ~~and publications and to offer new events and publications~~ by ~~addressing~~lower ~~the~~cost ~~needs~~ of ~~specific~~revenues ~~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~~favorable 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$164,000 ~~costs related to the development of new events and publications are accounted for~~ as ~~expenses,~~ soa ~~year-to-year~~result ~~results may be materially adversely affected by the number and timing~~ of ~~new~~foreign ~~product~~currency ~~launches~~exchange fluctuations.

~~Nexus Media’s overall operations may be adversely affected by risks associated with international operations.~~15

~~Nexus~~General ~~Media’s~~and ~~primary~~Administrative ~~operations are~~Expenses inconsist ~~the~~primarily ~~United~~of ~~Kingdom.~~compensation ~~The following risks in international markets could~~for ~~have~~personnel, aprofessional ~~material~~services, ~~adverse~~which ~~effect~~include onconsultants, ~~Nexus~~legal ~~Media’s future international operations~~fees, ~~and~~accounting, ~~consequently,~~audit onand ~~its~~tax ~~business~~fees, ~~results~~and ofadministrative ~~operations~~expenses ~~and~~associated ~~financial~~with ~~condition:~~operating as a public company.

~~• general~~General ~~economic~~and administrative expenses increased to $2,840,000 from $2,557,000 for the three-month period ended September 30, 2006 compared with the same period in 2005. The increase of $283,000 was primarily due to increases related to legal, audit and ~~political~~accounting ~~uncertainties~~fees as well as decreases related to reductions in general and ~~potential~~administrative ~~for~~expenses ~~social~~as ~~unrest;~~a result of cost savings. The Company incurred audit related fees in both the US and the UK primarily as a result of costs related to regulatory requirements.

~~• limitations~~In the three month period ended September 30, 2006, onthe ~~our~~Company ~~ability~~recorded toas ~~enforce~~a ~~legal~~reduction ~~rights~~to general and ~~remedies;~~administrative expenses in the amount of $562,515 (£300,000) as the result of a final settlement of the dilapidations with its landlord in a facility that Nexus had ceased using as of the date of acquisition by Ergo.

~~• state~~Amortization of intangibles increased to $64,000 from $51,000 for the three-~~imposed~~month periods ended September ~~restrictions~~30, on2006 and 2005, respectively. The increase in amortization of intangibles of approximately $13,000 was primarily due to a change in the ~~repatriation~~estimated life of Electronics ~~funds;~~World ~~and~~which resulted in an increase of approximately $9,000, plus another $4,000 as a result of foreign currency exchange fluctuations. This intangible asset was previously considered to have an indefinite life, but an annual review by management in 2005 resulted in an adjustment to a finite life of 15 years, beginning January 1, 2006.

14Interest income increased to $65,000 from $57,000 for the three-month periods ended September 30, 2006 and 2005, respectively. The increase of approximately $8,000 was primarily the result of increases in interest rates and foreign currency exchange fluctuations.

~~• potentially~~Income tax benefit was $127,290 for the three month period ~~adverse~~ended September 30, 2006 and none for the three month period ended September 30, 2005. The increase in the tax ~~consequences~~benefit was a result of a reduction of the deferred tax asset of the US company in the three month period ended September 30, 2006.

~~Reliance~~Net onincome ~~principal~~decreased ~~vendors~~to $70,000 ~~could~~from ~~adversely~~$699,000 for the three-month periods ended September 30, 2006 and ~~affect~~2005, ~~business~~respectively. This decrease in net income of approximately $629,000 was primarily due to decreases in gross profit of $469,000 and increases in general and administrative expenses of approximately $284,000 offset by an income tax benefit of approximately $127,000.

~~Nexus Media relies on principal vendors (principally~~For 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~~Nine ~~or willingness~~Months ofEnded ~~these~~September ~~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~~30, ~~Nexus~~2006 ~~Media may experience increased prices, interruptions~~ and ~~delays~~ ~~in services. These factors could adversely affect business.~~2005

~~Increases~~Prior to the acquisition of Nexus Media on April 1, 2005, the Company had no trading operations, having sold its previous operations in ~~paper~~November or2003. As a ~~postage~~result, ~~costs~~Nexus ~~could~~Media ~~cause~~is considered to be the predecessor. To assist in the understanding of the results of operations of the Company, management has presented supplemental historical results of Nexus Media. For the purpose of management’s ~~expenses~~discussion and analysis of financial condition and results of operations, management have combined the Company’s results for the six months ended September 30, 2005 with that of Nexus Media for the three months ended March 31, 2005 and compared that to ~~increase~~the results of the Company for the nine months ended September 30, 2006. This presentation is not in accordance with Generally Accepted Accounting Principles (“GAAP”) and ~~may~~the ~~adversely~~results ~~affect~~of ~~business~~operations of the Predecessor and Successor are not comparable due to changes in the basis of assets and liabilities as a result of the acquisition transaction. Management is providing this information because it believes that it enables the reader to evaluate the Company’s performance and results for the nine months ended September 30, 2006 and 2005 and the presentation is made solely to explain changes in the Company’s results. The effect of foreign currency exchange fluctuations on each area of the income statement has been separated out in the review of the results of operations, below, in order to explain the underlying movements.

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.16

~~Nexus Media may not be able to protect its~~Statement ~~intellectual~~of ~~property.~~Operations (Summary):

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.

	Ergo			Ergo			Predecessor			Combined
	Consolidated Nine months ended September 30, 2006			Consolidated Six months ended September 30, 2005			Nexus Media Three months ended March 31, 2005			Total Nine months ended September 30, 2005

Net revenues	$	22,767,600		$	19,366,713		$	6,584,877		$	25,951,590
Cost of revenues	16,913,889			13,703,360			5,922,761			19,626,121
Gross profit	5,853,711			5,663,353			662,116			6,325,469

Operating expenses:
General and administrative	8,687,473			5,656,840			2,433,071			8,089,911
Amortization of intangibles	186,349			103,195			52,951			156,146
Total operating expenses	8,873,822			5,760,035			2,486,022			8,246,057
Net operating loss	(3,020,111		)	(96,682		)	(1,823,906		)	(1,920,588		)

Interest income	202,081			85,882			69,971			155,853

Net loss before taxes	(2,818,030		)	(10,800		)	(1,753,935		)	(1,764,735		)
Income tax expense (benefit)	97,529			449,614			(353,536		)	96,078
Net loss	$	(2,915,559	)	$	(460,414	)	$	(1,400,399	)	$	(1,860,813	)

~~A material weakness in~~ For the ~~Company’s~~Nine ~~internal~~Months ~~controls~~Ended ~~could have~~September a30, ~~material~~2006 ~~adverse~~and ~~effect on the Company.~~2005

InRevenues ~~connection~~decreased ~~with~~to ~~the~~$22,768,000 ~~quarterly review of the financial statements of the Company~~ for the nine-month period ended September 30, ~~2005, the Company and~~ ~~Deloitte &~~2006 ~~Touche~~from ~~LLP~~$25, ~~our independent registered public accounting firm~~952,000 ~~identified~~for ~~certain material weaknesses in~~ the Company’s internal controls. The Company recently discovered that the lack of controls in fact resulted in errors under U.S. GAAP in the timing of recognition principally of certain sales and marketing costs relating to future events or publications during fiscal year 2004 and fiscal year 2005 by Nexus Media. Although the Company believes such errors have been corrected and will be identified in an amendment to the quarterly report on Form 10nine-Qmonth ~~for~~period ~~the quarter~~ ended ~~June~~ September 30, 2005~~, we may identify one or more errors due to material weaknesses in our internal control over financial reporting from time to time in the future~~. ~~In addition,~~The ~~because~~decrease of ~~its~~approximately ~~inherent limitations~~$3, ~~internal control over financial reporting may not prevent or detect misstatements~~184,000 ~~and~~was ~~any~~primarily ~~projections of any evaluation of effectiveness of internal control to future periods are subject to~~ the ~~risk that~~result ~~controls may become inadequate because~~ of ~~changes~~declines in ~~conditions or that~~ ~~the~~print ~~degree~~advertising ofrevenues ~~compliance with the policies or procedures may deteriorate. If we fail to maintain the adequacy~~ of ~~our internal controls~~$1, ~~including any failure to implement required new or improved controls~~100,000, orsubscription ifrevenues weof ~~experience~~$115,000, ~~difficulties~~book insales ~~their~~of ~~implementation~~$82,000, ~~our~~events ~~business~~revenues ~~and results~~ of ~~operations could be harmed~~$2,142,000 weand ~~could~~decreases ~~fail to be able to provide reasonable assurance~~ as toa result ~~our~~of ~~financial~~foreign ~~results~~currency orexchange ~~meet~~fluctuations ~~our~~of ~~reporting obligations~~$203,000, ~~and~~as ~~there~~described ~~could~~in beItem a3, ~~material~~offset ~~adverse~~by ~~effect~~increases onin ~~the~~internet ~~price~~related ofproduct ~~our~~revenues ~~securities~~of $458,000.

~~Results~~Advertising revenues declined by approximately $1,100,000, which was primarily the result of ~~Operations~~a decrease in the number of advertisements in its printing publications and not the result of price related issues. The Nexus Media Communications advertising revenue was approximately 10% lower in 2006 compared to the same period in 2005. Management has been transitioning the core business towards revenue from events, sponsorships and on-line advertising. Management has not yet increased revenues from its non-traditional areas to cover the decreases it has sustained from its traditional advertising and circulation revenue bases.

~~Prior~~Events torevenues ~~the~~decreased ~~acquisition~~by ~~of Nexus Media on April 1,~~approximately ~~2005~~$2,142,000 ~~Ergo~~primarily ~~had~~due noto ~~operations,~~events ~~having~~which ~~ceased~~did ~~its~~not ~~previous~~occur ~~operations~~ in ~~November 2003. As~~2006 anamely ~~result, Nexus Media is considered to be~~ the ~~predecessor. To~~ ~~assist~~Icelandic inFisheries ~~the~~Exhibition, ~~understanding~~which oftakes ~~the~~place ~~results~~once ofevery ~~operations~~three ofyears ~~the Company,~~and ~~management~~previously ~~has~~occurred ~~presented~~in ~~supplemental~~2005, ~~historical results of Nexus Media. For the purpose of management’s discussion~~ and ~~analysis~~resulted ofin ~~financial~~a ~~condition~~revenue ~~and~~shortfall ~~results~~ of ~~operations~~$2, ~~management have~~231,000. ~~combined~~There ~~the~~were ~~Company’s~~also ~~results~~a ~~for~~number ~~the~~of ~~six~~other ~~months~~smaller ~~ended~~events ~~September 30, 2005 with~~ that ofresulted ~~Nexus~~in ~~Media~~revenues ~~for the three months ended March 31, 2005 and compared~~ that towere ~~the~~higher ~~results~~or oflower ~~Nexus~~than ~~Media~~in ~~for the nine months ended September 30,~~ 2005~~. The~~ ~~table~~amounting isto ~~found~~a ~~preceding~~total ~~the discussion~~increase ofin the ~~results of operations for the nine months ended September 30,~~amount ~~2005. Management believes that this provides the most meaningful analysis~~ of ~~the Company’s results for the nine months ended September 30~~$89, ~~2005~~000.

~~For~~Internet ~~the~~related ~~Three~~product ~~Months~~revenues ~~Ended~~have ~~September~~increased 30by approximately $458,000. ~~2005~~This increase was approximately 60% related to on-line advertising and ~~2004~~40% to content licensing. The content and presentation for Internet related products has been improved and has resulted in an increase in Internet traffic, which has ultimately resulted in increased revenues.

~~Revenue.~~Cost of ~~Revenue increased to $10,907,195 from~~Revenues ~~$10,219,151~~includes ~~for~~ the ~~three~~cost ~~month~~of ~~period~~producing ~~ended~~and ~~September~~dispatching 30publications, ~~2005~~which ~~compared with~~includes ~~the~~paper, ~~same~~printing ~~period~~and indistribution ~~2004. The~~costs ~~increase~~as ~~of approximately~~well ~~$700,000~~as ~~was~~the ~~driven~~cost byof anthe ~~increase~~staff ~~in events revenue of~~(and ~~approximately~~external ~~$2,000,000,~~contractors) ~~which~~that ~~consisted~~write ofand ~~revenue~~produce ~~from~~ the ~~Commercial~~editorial ~~Fishing~~content ~~Exhibition~~ of our ~~approximately~~publications. For $2events,~~200,000,~~ ~~offset~~costs byof revenues ainclude ~~decline~~the incost ~~European~~of ~~Conference~~the ~~and Exhibition~~venue, onstaging, ~~Optical~~furniture, ~~Communications~~renting ~~(“ECOC”)~~equipment, catering ~~revenue~~staff ofcosts ~~approximately $300,000,~~ and ~~market~~the ~~driven~~direct ~~declines~~and ~~in advertising~~incremental ~~revenues~~cost of ~~approximately~~obtaining exhibitors ~~$1,200,000~~and delegates.

~~The~~Cost ~~Commercial Fishing~~of ~~Exhibition~~Revenues isdecreased ~~one~~to of$16,913,000 ~~Nexus~~for ~~Media’s~~the nine-month ~~most~~period ~~significant~~ended ~~events~~September –30, ~~second only~~2006 tofrom $19,626,000 for the ~~World~~nine-month period ~~Fishing~~ended ~~Exhibition~~September ~~held~~30, ~~every~~2005. ~~six~~The ~~years~~decrease inof ~~Vigo~~approximately $2,713,000 ~~Spain~~was ~~which~~a ~~Nexus~~direct ~~Media~~result ~~also~~of ~~ran~~the oncore abusiness ~~contract~~transitioning ~~basis~~towards events, sponsorships and on-line advertising. This is manifested by decreases in: the ~~last~~cost ~~two~~of producing ~~occasion’s~~and ~~l997~~dispatching publications of $592,000; subscription and mailing ~~2003. Commercial~~list ~~Fishing~~costs isof ~~still~~$208,000; ~~the most~~personnel ~~important~~costs ~~industry~~of in$1,558,000; ~~Iceland~~event costs of $520,000 and ~~the~~foreign ~~fishing~~currency ~~exhibition~~exchange fluctuations –of ~~run~~$153,000, onoffset aby ~~three~~increases in internet-related costs ~~year~~of ~~cycle~~$22,000 –and ispromotion ~~the~~costs ~~most~~of ~~important~~$296,000. ~~event~~Promotion incosts have risen for the ~~national~~key ~~calendar~~publications targeted for growth.

15Gross profit margin increased to 26% compared to 24% of revenues for the nine-month periods ended September 30, 2006 and 2005, respectively. The decrease in both revenues and cost of revenues detailed above has resulted in a lower gross profit of $472,000. Decreases in revenues from publications have been partly offset by decreases in cost of revenues, resulting in a loss of gross profit, before editorial and sales staff costs, of $464,000. The cost of revenue decrease was primarily the result of management initiatives leading to improved control over the pagination of the publications in order to improve the proportion of revenue to costs. The decrease in gross profit on events in the amount of $1,645,000 is a result of revenue and cost of revenues changes as detailed above. Cost savings in the Editorial and Sales teams, which were reorganized, resulting in decreased costs of approximately $1,638,000, have offset the decrease in gross profit margin. Foreign exchange fluctuations, included within the above variances, in the amount $49,000 have adversely affected gross profit.

The 2005 Commercial Fishing Exhibition was our most successful to date. The revenue is predominantly derived from stand space sales of the 6,000 square meter venue with approximately 60% of the exhibitors from Iceland with the rest coming from 35 different countries.17

~~ECOC~~General ~~is the European optical communication event serving the fiber optic communications technology industry~~ and itAdministrative ~~presents~~Expenses ~~the latest~~consist ~~and~~primarily ~~future~~of ~~optical~~compensation ~~communications components~~for personnel, ~~products,~~professional ~~systems and~~ services~~. The~~, ~~event consists of a large exhibition and technical conference~~ which ~~rotates~~include ~~around Europe and has been an annual event for the past 32 years. This event generated $1~~consultants,~~600,000~~ oflegal ~~revenue~~fees, ~~in 2005~~accounting, aaudit ~~reduction~~and oftax ~~$286~~fees,~~000,~~ ~~primarily~~and ~~due~~administrative toexpenses ~~the~~associated ~~market~~with operating ~~driven~~as ~~decline~~a ~~in the~~public ~~telecommunication industry~~company.

~~Advertising revenues~~General ~~declined~~and byadministrative expenses increased to $18,~~200~~687,000 infrom $8,090,000 for the nine-month ~~quarter~~period ~~substantially~~ended ~~due~~September to30, ~~volume~~2006 ~~rather~~compared ~~than price~~with ~~decreases~~the same period in 2005. The ~~Nexus~~increase ~~Media~~of ~~Communications~~$597,000 ~~revenue~~was isprimarily ~~approximately~~due ~~52% from~~to ~~advertising~~US inparent ~~2004.~~company ~~Management~~increases in ~~has~~general ~~been~~and ~~transitioning~~administrative ~~the~~expenses ~~core~~of ~~business revenue~~approximately ~~towards~~$582,000. ~~revenue~~This ~~from~~was primarily ~~events,~~the ~~sponsorships~~result ~~and~~of ~~on-line~~increases ~~advertising. Management~~in ~~has~~legal ~~not~~and ~~yet~~other ~~increased~~professional ~~revenues~~fees ~~enough~~connected ~~from~~with ~~its~~the ~~non-traditional~~proposed ~~areas~~reverse tostock ~~cover~~split ~~the~~as ~~decreases~~announced iton ~~has~~October ~~sustained~~20, ~~from~~2006. ~~its~~The ~~traditional~~Company ~~advertising~~incurred ~~base. This~~audit ~~trend~~related isfees ~~part~~in ofboth the ~~current~~US ~~general~~and ~~market~~the ~~conditions~~UK primarily inas ~~the business~~a toresult ~~business~~of ~~media~~costs ~~sector~~related to regulatory requirements.

~~Gross~~In ~~profit increased to 30% for~~ the ~~three~~nine month period ended September 30, ~~2005~~2006, ~~from~~the Company ~~20%~~recorded ~~for~~as ~~the~~a ~~three~~reduction to ~~month~~general ~~period~~and ~~ended~~administrative ~~September~~expenses 30in the amount of $562,515 ~~2004.~~(£300,000) ~~This~~as ~~increase~~the isresult ~~primarily~~of ~~driven~~a byfinal settlement of the ~~Commercial~~ ~~Fishing~~dilapidations ~~Expedition~~with ~~which~~its ~~generated~~landlord in a ~~gross~~facility ~~profit~~that Nexus had ceased using as of ~~$1,481,000~~the date of acquisition by Ergo.

~~General~~Amortization of intangibles increased to $186,000 from $156,000 for the nine-month periods ended September 30, 2006 and ~~Administrative~~2005, ~~Expenses~~respectively. ~~General~~ ~~and~~The ~~administrative expenses~~increase ~~consist~~in ~~primarily~~amortization of ~~compensation~~intangibles ~~for~~of approximately ~~personnel~~$30,000 ~~professional~~is primarily due to the change in the estimated life of ~~services,~~Electronics ~~which~~World. ~~include~~This ~~consultants,~~intangible ~~legal~~asset ~~fees,~~was ~~accounting,~~previously ~~audit~~considered ~~and~~to ~~tax~~have an ~~fees,~~indefinite ~~and~~life ~~administrative~~but ~~expenses~~an ~~associated~~annual ~~with~~review ~~operating~~by asmanagement ahas ~~public~~adjusted this to a ~~company~~finite life of 15 years, beginning January 1, 2006.

~~General and~~The ~~administrative~~acquisition ~~expenses~~of ~~increased~~Nexus todid ~~$2,556,571~~not ~~from~~have ~~$1,566,547~~a ~~for~~material ~~the~~impact ~~three month~~on ~~period ended September 30, 2005 compared with~~ the ~~same~~amortization ~~period in 2004. The~~of ~~increase~~intangible ~~of approximately $1~~assets,~~000,000~~ ~~represents increased costs~~ as aHighbury ~~result~~House’s ~~of the~~book ~~separation~~value of ~~Nexus~~all ~~Media~~intangible ~~from its former parent company, Highbury House~~assets ~~and~~closely ~~increased~~approximated ~~costs~~the ~~due~~fair tovalue ~~fulfilling requirements necessary~~ as arecorded ~~result~~in ~~of being~~the ~~acquired~~purchase ~~by a US public company of approximately $450,000 and expenses of Ergo Science of approximately $550,000~~accounting.

~~Net~~Interest income increased to $~~699~~202,~~217~~ 000 from $~~316~~156,~~559~~000 for the ~~three~~ nine-month periods ended September 30, ~~2005~~2006 and ~~2004~~2005, respectively. The increase in ~~net income~~ of approximately $~~382~~46,000 iswas primarily ~~attributable~~the toresult ~~increases~~of increases in ~~gross~~interest ~~profit~~rates ofand ~~$1,195,000~~foreign ~~offset~~currency byexchange ~~increases~~fluctuations inas ~~operating expenses of~~well ~~approximately~~as ~~$935,000~~increases ~~and~~in ancash ~~decrease~~available infor ~~income~~investment ~~tax~~by ~~expense~~Nexus ~~of $133,000~~Media.

~~For~~Income tax expense increased to $98,000 from $96,000 for the ~~Nine~~nine-month ~~Months~~periods ~~Ended~~ended September 30, ~~2005~~2006 and 2005, ~~2004~~respectively. During the nine month period ended September 30, 2005 the Nexus Media deferred tax asset was written down by $96,000 reflecting the extent to which taxable losses could be offset against future profits. The tax expense for the nine-month period ended September 30, 2006 relates to the deferred tax asset written off by Nexus Media in the nine month period ended September 30, 2006 because a tax liability against which it could be offset was extinguished during the period following an agreement with the UK tax authorities. This is offset by tax benefits of $69,000 on inter-company interest income earned by the US operation of Ergo.

~~Statement~~Net loss increased to $2,916,000 from $1,861,000 for the nine-month periods ended September 30, 2006 and 2005, respectively. The increase in net loss of ~~Operations~~approximately $1,055,000 ~~(Summary):~~was primarily attributable to decreases in revenues and resultant loss in gross profit plus increased general and administrative expenses and unfavorable foreign currency exchange fluctuations.

				Predecessor
	Ergo			Nexus Media
	Consolidated Six months ended September 30, 2005			Three months ended March 31, 2005			Combined Total
				As restated
Net revenues	$	19,366,713		$	6,584,877		$	25,951,590
Cost of revenues	13,703,360			5,922,761			19,626,121
Gross profit	5,663,353			662,116			6,325,469
Operating expenses	5,760,035			1,701,342			7,461,377
Interest and other income	85,882			69,971			155,853
Net loss before taxes	(10,800		)	(969,255		)	(980,055		)
Income tax expense (benefit)	449,614			(42,775		)	406,839
Net loss	$	(460,414	)	$	(926,480	)	$	(1,386,894	)

Liquidity and Capital Resources

16For 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 six months ended September 30, 2005 with that of Nexus Media for the three months ended March 31, 2005 and compared that to the cash flows of the Company for the nine months ended September 30, 2006. This presentation is not in accordance with GAAP and the statements of cash flows of the Predecessor and Successor are not comparable due to changes in the basis of assets and liabilities as a result of the acquisition transaction. Management believes that this provides the most meaningful analysis of the Company’s cash flows for the nine months ended September 30, 2006.

Revenue Revenue decreased to $25,951,590 from $27,102,971 for the nine month period ended September 30, 2005 compared with the same period in 2004. The decrease of approximately $1,200,000 was primarily the result of declines in both advertising revenue of $2,800,000 and subscription revenue of $500,000 offset by increases in event revenue of $2,100,000.18

~~Event revenues increases~~Statement ~~were primarily driven by the Commercial Fishing Exhibition with revenues~~ of ~~$2,200,000~~Cash ~~offset~~Flows ~~by a decline in ECOC revenues of $300,000. New events generated the remaining $200,000 of revenues.~~(Summary):

Advertising revenues declined by approximately $2,800,000, which was primarily the result of a decrease in volume rather than a result of pricing. The Nexus Media Communications revenue was 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 publishing.

	Ergo			Ergo			Predecessor			Combined
	Consolidated Nine months ended September 30, 2006			Consolidated Six months ended September 30, 2005			Nexus Media Three months ended March 31, 2005			Total Nine months ended September 30, 2005

Net cash (used in) provided by operating activities	$	(2,280,309	)	$	3,153,526		$	(1,575,573	)	$	1,577,953
Net cash provided by (used in) investing activities	289,374			(21,340,584		)	(112,438		)	(21,453,022		)
Net decrease in cash and cash equivalents	(1,990,935		)	(18,187,058		)	(1,688,011		)	(19,875,069		)

Effect of exchange rates on cash and cash equivalents	414,615			(121,177		)	(22,224		)	(143,401		)
Cash and cash equivalents at beginning of period	7,220,399			26,136,046			1,710,235			27,846,281

Cash and cash equivalents at end of period	$	5,644,079		$	7,827,811		$	—		$	7,827,811

~~Gross profit remained at 24% for the nine month periods ended September 30, 2005 and 2004.~~Resources

~~General~~Cash and cash equivalents were $5,644,000 and ~~Administrative~~$7,220,000 ~~Expenses. General~~at September 30, 2006 and ~~administrative~~December ~~expenses~~31, ~~consist~~2005, ~~primarily~~respectively. ofCash ~~compensation~~has ~~for~~decreased ~~personnel,~~in ~~professional~~the nine month period ended ~~services~~September 30, ~~which~~2006 ~~include~~by ~~consultants~~$1,576,000 ~~legal~~primarily ~~fees~~as a result of the company’s net loss in the amount of $2,916,000 ~~accounting~~and also the other items explained below. Cash was used primarily to pay operating costs of the company including additional costs for legal, audit and ~~tax~~other professional fees, as indicated in the discussion of general and administrative expenses ~~associated~~above. ~~with~~The ~~operating~~majority of the Company’s cash is held as aPounds ~~public~~Sterling ~~company~~by banks in the UK by Nexus Media and the change in cash and cash equivalents therefore was partly the result of foreign currency exchange fluctuation. The Company’s use of cash can fluctuate significantly principally due to the timing of events with deferred revenue being received in cash prior to the related creditors being incurred or settled. It is anticipated that this pattern will continue in the foreseeable future.

~~General~~Net ~~and~~cash ~~administrative~~flow ~~expenses increased to $7,461,377~~ from ~~$5,626,842~~operating for the nine month period ended September 30, 2005 compared with the same period in 2004. The increase of approximately $1,830,000 represents increased costs as a result of the separation of Nexus Media from its former parent company, Highbury House and increased costs due to compliance requirements necessary as a result of being acquired by a U.S. public company, partially offset by reductions as a result of general cost controls by Nexus Media.activities

Net ~~income~~cash ~~(loss)~~used in ~~decreased~~operating toactivities was $(12,~~386~~280,~~894)~~000 ~~from $480,120~~ for the nine -month ~~periods~~period ended ~~September~~ September 30, ~~2005~~2006 ~~and~~compared ~~2004,~~to ~~respectively.~~net ~~The~~cash ~~increase~~provided inby ~~net~~operating ~~loss~~activities of ~~approximately~~ $1,~~867~~578,000 ~~is attributable to decreases in revenue and gross~~ ~~profit~~for asthe ~~well~~nine-month asperiod ~~increases~~ended inSeptember ~~general and administrative expenses. Income tax expense in the quarter ending June~~ 30, 2005. The ~~was~~increase ~~$449,614 as the deferred tax asset~~ in ~~Nexus Media was provided~~net ~~against~~cash ~~due~~used toby ~~uncertainty~~operating ~~over~~activities ~~recoverability due to the issuing~~ of ~~unsecured 10% Fixed Rate loan notes of Nexus Holdings Limited to Ergo of £10,100,000 (~~approximately $183,~~109~~858,000), ~~which~~was ~~means~~primarily the result ~~recovery~~ of ~~this~~changes ~~asset~~in isworking ~~no longer~~capital, ~~more likely than not.~~specifically:

~~Liquidity~~ (a) Cash used by a reduction in accrued expenses and deferred ~~Capital~~revenue ~~Resources~~of approximately $1,374,000 primarily due to the Icelandic Fisheries Exhibition which occurred in 2005 but did not occur in 2006.

~~For~~(b) Cash ~~the~~used ~~reasons~~by ~~outlined~~accounts ~~above, for~~receivable ~~the purpose~~ of ~~management’s discussion and analysis of liquidity and~~approximately ~~capital resources~~$1,324,000 indue ~~the~~to ~~table~~collections ~~below~~from ~~management~~customers ~~have~~in ~~combined the Company’s cash flows for the six months ended September 30,~~ 2005 ~~with~~ that ofhad ~~Nexus~~been ~~Media~~outstanding ~~for~~prior ~~the three months ended March 31, 2005 and compared that~~ to the ~~cash~~acquisition ~~flows~~ of Nexus ~~Media~~from ~~for~~Highbury ~~the~~House ~~nine months ended September 30, 2004~~Communications. ~~Management believes that this provides the most meaningful analysis of the Company’s cash flows for the nine months ended September 30, 2005.~~

~~Statement~~(c) Cash provided in the amount of ~~Cash~~approximately $1,670,000 ~~Flows~~as ~~(Summary):~~a result of delayed payments to suppliers in 2005; this was a one-time situation that occurred when Nexus was owned by Highbury House Communications.

	Ergo			Predecessor
	Consolidated			Nexus Media
	Six months ended September 30, 2005			Three months ended March 31, 2005			Combined Total
				As restated
Net cash provided by (used in) operating activities	$	3,153,526		$	(1,575,574	)	$	1,577,952
Net cash used in investing activities	(21,340,584		)	(112,438		)	(21,453,022		)
Net decrease in cash and cash equivalents	(18,187,058		)	(1,688,012		)	(19,875,070		)
Effect of exchange rates on cash and cash equivalents	(121,177		)	(22,223		)	(143,400		)
Cash and cash equivalents at beginning of period	26,136,046			1,710,235			27,846,281
Cash and cash equivalents at end of period	$	7,827,811		—			$	7,827,811

(d) Cash used for the purchase of new inventory, plus decreases in other creditors, net of decreases in prepayments and other current assets totaling approximately $1,575,000 in the nine months ended September 30, 2006.

17(e) Cash used in general operating activities of the company, of approximately $1,778,000 primarily the result of increases in general and administrative expenses due to increased costs for professional related fees as a result of regulatory requirements of being a public company in the United States.

~~Resources~~Net cash flow from investing activities

OnNet ~~April~~cash 1,provided by ~~2005~~investing activities was $289,000 for the nine-month period ended September ~~Company~~30, 2006 compared to net cash used in investing activities of $21,~~555~~453,~~267~~000 offor the ~~its~~nine-month ~~own~~period ended September 30, 2005. The net cash toused ~~complete~~in the ~~transaction~~nine ofmonth period ended September 30, 2005 was ~~acquiring~~primarily the result of the acquisition of Nexus Media. ~~The~~by ~~Company~~Ergo ~~also~~in ~~incurred~~April ~~approximately~~2005. The ~~$640,000~~cash ~~of transaction~~provided ~~costs~~by ~~related~~investing toactivities in the ~~acquisition,~~amount of ~~which~~ $~~519~~289,000 ~~was~~in ~~paid~~the ~~as of~~nine month period ended September 30, ~~2005.~~2006 ~~This~~ was ~~offset~~due byto ~~the~~cash ~~working~~received ~~capital~~in ~~adjustment~~the ofamount ~~GBP~~of ~~464,000 (approximately~~ $~~873~~421,000) ~~favorable~~as topart of the ~~Company~~final ~~and~~payment ~~was~~from ~~received~~Highbury inHouse as reimbursement for ~~the~~warranty ~~third~~claims, ~~quarter.~~offset Asby ofcash ~~September~~used ~~30,~~to ~~2005,~~purchase ~~the~~property ~~Company~~and ~~had~~equipment totaling $7132,~~827,811~~000. ofThe ~~cash and~~receipt ~~cash~~from ~~equivalents~~Highbury House occurred in the first quarter 2006.

The Company’s UK subsidiary, Nexus Media Communications Limited has a net overdraft facility of £2 million (approximately $3.6 million) bearing interest at 2% above base rate, the term of which is 364 days from March 29, 2005 although the facility will remain on demand. The amount drawn-down on the facility is required to be covered by good trade debtors of less than 90 days at all times. There has been no draw down on this facility during the third quarter and there is no outstanding balance as of September 30, 2005.19

Cash provided by (used in) operating activities was $1,577,952 for the nine month period ended September 30, 2005 compared to $(481,203) for the nine month period ended September 30, 2004. The increase in cash provided by operating activities of approximately $2,000,000 was primarily the result of non cash charges for depreciation of approximately $214,000, amortization of approximately $161,000, provision for doubtful accounts of approximately $103,000 and deferred income taxes of approximately $392,000 and changes in working capital accounts of approximately $1,130,000. The positive working capital was primarily the result of a reduction of accounts receivable and accrued expenses due to the cyclical nature of our business.Requirements

~~Net~~The ~~cash~~Company ~~used~~expects ~~in investing~~that ~~activities~~cash ~~was~~generated ~~$21,453,022~~from ~~for~~its operating ~~the~~business ~~nine~~will ~~month~~fund ~~period~~its ~~ended~~current ~~September 30,~~operations ~~2005~~for ~~compared~~at toleast ~~$82,354 for~~ the ~~nine~~next ~~month~~12 ~~period ended September 30, 2004~~months. In ~~The~~the ~~large~~event ~~increase~~that inthe ~~cash~~Company ~~used~~purchases inan ~~investing~~additional ~~activities~~business, ~~was~~ the ~~result~~Company ofmay ~~the~~require ~~acquisition~~additional ofcapital ~~the~~to ~~Nexus~~complete ~~Media business in~~ the ~~second quarter~~acquisition.

The Company’s ~~use~~cannot ofpay ~~cash~~dividends ~~has~~on ~~fluctuated~~our ~~significantly~~common stock without first obtaining the ~~principally~~written ~~due~~consent toof the ~~timings~~holders of ~~events~~a ~~with~~majority ~~revenue~~of ~~being~~our ~~received~~outstanding inseries ~~cash~~D ~~prior~~preferred tostock. ~~related~~At ~~creditors~~this ~~being~~time, ~~incurred~~the orCompany ~~settled. It~~has isno ~~anticipated~~intention ~~that~~to ~~this~~request authorization ~~pattern~~to ~~may continue~~pay individends from the ~~foreseeable~~holders ~~future~~of the outstanding series D preferred stock.

~~Requirements~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The~~Foreign ~~Company expects that cash generated from our newly~~Currency ~~acquired~~Exchange operating business will fund our current operations for at least the next 12 months. In the event that the Company purchases an additional business, the Company may require additional capital to complete the acquisition.Risks

The Company’s ~~cannot~~operations ~~pay~~are ~~dividends~~conducted onprincipally ~~our~~in the ~~common~~United ~~stock without~~Kingdom ~~first~~and ~~obtaining~~most of the ~~written~~entities ~~consent~~in the group have a functional currency of ~~the~~Pounds ~~holders~~Sterling. Each financial period, all assets, including goodwill, and liabilities of the UK group entities with a ~~majority~~non ofUS ~~our~~dollar functional ~~outstanding~~currency ~~series~~are Dtranslated ~~exchangeable~~into ~~preferred~~US ~~stock~~dollars, Ergo’s reporting currency, using the closing rate method.

~~Recently~~There are principally two ~~Issued~~types ~~But~~of ~~Not~~foreign ~~Yet~~exchange ~~Adopted~~risk: ~~Accounting~~transaction ~~Pronouncements~~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.

~~In December 2004,~~Transaction 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.risks

18Transactions in currencies other than the functional currency are translated at either an exchange rate used for the current quarter in which the transaction took place (to approximate to the exchange rate at the date of transactions for that quarter) 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 foreign exchange transaction gains and losses.

~~ITEM~~Nexus 3Media’s cash balances consist of Euros, South African Rands, British Pounds and U. ~~QUANTITATIVE~~S. ~~AND~~Dollars. ~~QUALITATIVE~~This ~~DISCLOSURES~~exposes ~~ABOUT~~the Company to ~~MARKET~~foreign ~~RISK~~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 September 30, 2006, the Company held approximately 188,000 Euros (approximately $240,000), 77,000 Rands (approximately $11,000) and $405,000 in U.S Dollars in the cash accounts and remains exposed to changes in the foreign currency rate. As of September 30, 2006, a 10% increase or decrease in the level of the Euro exchange rate against the Pounds Sterling with all other variables held constant would result in a realized gain or loss of approximately $24,000. A 10% increase or decrease in the level of the South African Rand exchange rate against the Pounds Sterling with all other variables held constant would result in a realized gain or loss of approximately $1,000. As the date of events approach, exchange rate fluctuations are anticipated to have a decreasing impact on the Company’s financial statements, as costs are being incurred the Company will reduce cash balances collected in advance of the event. Approximately 87% of our 2006 revenues are expected to be in Pounds Sterling.

~~Foreign~~Translation ~~Currency Exchange Risks~~risks

The ~~Company’s~~financial ~~operations~~statements of Nexus Media with a functional currency of Pounds Sterling are ~~conducted~~translated ~~principally~~into inU.S. dollars using the ~~United~~current ~~Kingdom~~rate method. Accordingly, assets and ~~most~~liabilities ofare ~~the~~translated ~~entities~~at period-end inexchange rates while revenue, expenses and cash flows are translated at the period’s weighted average exchange rates. Adjustments resulting from ~~group~~these ~~have~~translations aare ~~functional~~accumulated ~~currency~~and reported as a component of ~~British~~other comprehensive ~~Pounds~~loss in stockholders’ equity.

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.20

~~Transaction~~The fluctuation in the exchange rates resulted in ~~risks~~foreign currency translation losses reflected as a component of comprehensive loss in stockholders’ equity of $110,534 at September 30, 2006. Future changes in the value of the US dollar to Pounds Sterling could have a material impact on our financial position.

~~Transactions~~Nexus ~~in currencies~~Media’s ~~other~~translation ~~than~~risks ~~the~~as ~~functional~~they ~~currency~~pertain ~~are~~to ~~translated at either~~ the ~~exchange~~presentation ~~rate~~of inconversion ~~effect at the end~~ of the ~~month~~Nexus infinancial ~~which~~statements ~~the~~from ~~transaction occurs~~their orfunctional incurrency ~~some~~of ~~cases~~Pounds ~~the~~Sterling ~~rate~~into inU.S. ~~effect~~dollars atwere ~~the~~similar ~~date~~as ~~of the transaction. Differences~~ in ~~exchange rates during~~ the ~~period~~year ~~between~~ended ~~the~~December ~~date a transaction denominated in a foreign currency is consummated and the date on which it is settled or translated~~31, ~~are recognized in the consolidated statements of operations as Nexus Media Communications~~2005.

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 September 30, 2005, the Company held approximately 26 million Icelandic Krona (approx $0.ITEM 4 ~~million), and 0~~.~~6 million U.S dollars in the cash accounts and~~ ~~remains exposed to changes in the foreign currency rate. As of September 30,~~ CONTROLS ~~2005,~~AND 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 $42,000. 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 took place in September and will take place again in 2008, in excess of 85% of our 2005 revenue is expected to be in sterling.PROCEDURES

~~Translation~~Disclosure ~~risks~~Controls and Procedures

~~The financial statements~~In ofconnection ~~Nexus Media~~ with athe ~~functional~~audit ~~currency~~ of ~~British~~the ~~Pounds~~financial ~~are~~statements ~~translated~~of ~~into U.S.~~the ~~dollars~~Company ~~using~~for the period ~~current~~ended ~~rate~~December ~~method.~~31, ~~Accordingly~~2005, ~~assets~~the Company and ~~liabilities are~~Deloitte ~~translated~~& atTouche ~~period-end~~LLP, ~~exchange~~our independent ~~rates~~registered ~~while~~public ~~revenue~~accounting ~~and~~firm, ~~expenses~~identified ~~are~~certain material ~~translated~~weaknesses atin the ~~period~~Company’s ~~average~~internal ~~exchange rates~~controls. The ~~Adjustments~~material ~~resulting~~weaknesses ~~from these~~identified ~~translations~~and ~~are~~the ~~accumulated~~progress ~~and~~made ~~reported~~in asovercoming them awere ~~component~~documented ofin ~~accumulated other~~Item ~~comprehensive~~4, ~~loss~~“Controls and Procedures” in ~~stockholders~~Ergo’s ~~equity~~quarterly report on Form 10-Q for the period ended June 30, 2006.

~~The~~As of ~~fluctuation~~the inend of the quarterly period ended September 30, 2006, our management, ~~exchange~~with ~~rates~~the ~~resulted~~participation inof ~~foreign~~Charles ~~currency~~E. ~~translation~~Finelli, ~~losses~~our ~~reflected~~Chief asExecutive aOfficer and acting ~~component~~Chief Financial Officer, evaluated the effectiveness of ~~accumulated~~our ~~other~~disclosure ~~comprehensive~~controls and ~~loss~~procedures. Based on this evaluation, Mr. Finelli concluded that the disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the ~~stockholders’~~reports ~~equity~~that we file or submit under the Securities Exchange Act of 1934 is $1recorded,~~187~~ processed,~~546~~ atsummarized ~~September~~and 30reported, ~~2005.~~within ~~Future~~the ~~changes~~time periods specified in the ~~value~~Securities ofand ~~the~~Exchange USCommission’s ~~dollar to~~rules ~~British~~and ~~Pound~~forms. Mr. ~~could~~Finelli’s ~~have~~conclusion awas based principally on the material ~~impact~~weaknesses onin ~~our~~the ~~financial~~internal ~~position~~controls of the Company as identified by the Company and Deloitte & Touche LLP, our independent ~~results~~registered ofpublic ~~operations~~accounting firm.

19Changes in Internal Control Over Financial Reporting

~~ITEM~~There have 4.been ~~CONTROLS~~no ~~AND~~changes ~~PROCEDURES~~in the Company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to material affect, the Company’s internal control over financial reporting.

~~Disclosure Controls and Procedures~~21

AsPART ~~of the end of the quarterly period ended September 30, 2005, our management, with the participation of Charles E~~II. Finelli, our Chief Executive Officer and acting Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, Mr. 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.

~~Changes in~~OTHER ~~Internal Control Over Financial Reporting~~INFORMATION

InITEM connection with the quarterly review of the financial statements of the Company for the period ended June 30, 2005, the Company and Deloitte & Touche LLP, our independent registered public accounting firm, identified certain material weaknesses in the Company’s internal controls1. A LEGAL material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The material weaknesses identified at the Company result from the acquisition of Nexus Media, which before the acquisition 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”).PROCEEDINGS

Before 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 companiesNone. 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. The Company recently discovered that the lack of controls in fact resulted in errors under U.S. GAAP in the timing of recognition principally of certain sales and marketing costs relating to future events or publications during fiscal year 2004 and fiscal year 2005 by Nexus Media.

~~Since~~ITEM ~~acquiring Nexus Media, the Company has been working to remediate the material weaknesses identified~~1A. ~~Actions~~ ~~taken include the~~RISK hiring of an interim chief financial officer of Nexus Media, engaging third party accountants with U.S. GAAP skills to assist with the preparation of SEC reports, and reorganizing the finance department of Nexus Media. The Company continues to work to implement the internal controls necessary for a stand-alone entity.FACTORS

20A detailed discussion of risk factors is provided in Item 1A, “Risk Factors” in Ergo’s Annual Report on Form 10-K for the year ended December 31, 2005 and as provided in Item 1A of Part II “Risk Factors” in Ergo’s Quarterly Report on Form 10-Q for the period ended June 30, 2006. No material changes in risk factors occurred during the third quarter of 2006.

~~PART~~ITEM II2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~OTHER INFORMATION~~None.

ITEM 13. DEFAULTS ~~LEGAL~~UPON ~~PROCEEDINGS~~SENIOR SECURITIES

None.

ITEM 24. SUBMISSION ~~UNREGISTERED SALES~~ OF ~~EQUITY~~MATTERS ~~SECURITIES~~TO ~~AND~~A ~~USE~~ VOTE OF ~~PROCEEDS~~SECURITY HOLDERS

None.

ITEM 35. OTHER ~~DEFAULTS UPON SENIOR SECURITIES~~INFORMATION

None.

ITEM 46. ~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~ EXHIBITS

~~None~~31.1 Certification of Principal Executive Officer and acting Principal Financial Officer pursuant to Exchange Act Rule 13 a-14(a).

~~ITEM~~32.1 Certification 5Pursuant to 18 U.S.C. ~~OTHER~~Section ~~INFORMATION~~1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

~~None.~~22

~~ITEM 6. EXHIBITS~~SIGNATURES

~~31.1 Certification~~Pursuant to the requirements of ~~Principal~~Section ~~Executive~~13 ~~Officer~~or ~~and~~15(d) ~~acting~~of ~~Principal~~the ~~Financial~~Securities ~~Officer~~Exchange ~~pursuant~~Act of 1934, the Registrant has duly caused this report to ~~Exchange~~be ~~Act~~signed ~~Rule~~on 13its ~~a-14(a)~~behalf by the undersigned, thereunto duly authorized.

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

ERGO SCIENCE CORPORATION


By:	/s/ Charles E. Finelli
	Charles E. Finelli
	President, Chief Executive Officer, and acting Chief
	Financial Officer,
	Principal Executive and Principal Financial and
	Accounting Officer


Date:		November 13, 2006

2123

~~SIGNATURES~~INDEX TO EXHIBITS

~~Pursuant~~ERGO ~~to the~~SCIENCE ~~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.~~CORPORATION

	ERGO SCIENCE CORPORATION
Exhibit No.		Exhibit
	By:	/s/ Charles E. Finelli
31.1		Certification of Principal Executive Officer and acting Principal Financial Officer pursuant to Exchange Act Rule 13 a-14(a).
		Charles E. Finelli
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
		President, Chief Executive Officer, and acting Chief Financial Officer,
		Principal Executive and Principal Financial and Accounting Officer
	Date:		November 21, 2005

2224

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.

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.

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