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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 14, 2005
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ERGO SCIENCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-69172 04-3565746
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification Number)
790 Turnpike St., Suite 202
North Andover, MA 01845
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 688-8833
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On November 15, 2005, Ergo Science Corporation (the "Company") issued a
press release announcing that the audit committee of the Company's board of
directors (the "Audit Committee"), upon the recommendation of management and
with the concurrence of the Company's independent registered public accountants,
Deloitte & Touche LLP ("Deloitte"), has concluded that the Company's previously
issued financial statements as filed in its Form 10-Q for the quarterly period
ended June 30, 2005 and referenced below should no longer be relied upon because
of errors in those financial statements and should be restated to reflect
necessary accounting adjustments. The Audit Committee reached its conclusions on
November 14, 2005. The adjustments do not affect the Company's reported
revenues, its cash flows or its cash/liquidity position. The Company currently
believes that principally as a result of the seasonality of the business of
Nexus Media, the 2004 annual results of Nexus Media reported in the 8-K/A filed
on June 17, 2005 are not materially misstated.
The Company discovered that there were errors under US 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
the business-to-business publishing division (referred to herein as "Nexus
Media") recently acquired by the Company from Highbury House Communications plc,
a company organized under the laws of the United Kingdom ("Highbury House").
Nexus Media consisted of eight wholly-owned subsidiaries of Highbury House,
which before the acquisition had not prepared quarterly separate or consolidated
financial statements. The error arose primarily because certain sales and
marketing costs relating to future events or publications during fiscal year
2004 and fiscal year 2005 by Nexus Media were deferred to and expensed in
subsequent periods when they should have been expensed during the period in
which they were incurred.
While management is continuing to quantify the errors, management
estimates that the errors result in the following adjustments:
o the overstatement of cost of revenues and the understatement
of net income before tax of Nexus Media of $76,000; and the
understatement of total assets of Nexus Media of $76,000 on
the balance sheet, for the three month period ended March 31,
2004;
o the understatement of cost of revenues and the overstatement
of net income before tax of Nexus Media of $246,000; and the
overstatement of total assets of Nexus Media of $246,000 on
the balance sheet, for the three month period ended June 30,
2004;
o the overstatement of cost of revenues and the understatement
of net income before tax of $24,000; and the understatement of
the total assets of Nexus Media of $24,000 on the balance
sheet, for the three month period ended March 31, 2005; and
o the understatement of cost of revenues and the overstatement
of net income before tax of the Company of $116,000; and the
overstatement of total assets of the Company of $116,000 on
the balance sheet, for the three month period ended June 30,
2005.
The Company expects to file its restated financial statements in an
amendment to its Quarterly Report on Form 10-Q/A for the quarterly period ended
June 30, 2005.
The Audit Committee and management have discussed with Deloitte the
matters disclosed in this Current Report on Form 8-K.
A copy of the Company's November 15, 2005 press release announcing the
restatement is attached hereto as Exhibit 99.1, and the portion thereof relating
to the restatement is incorporated in this Item 4.02 by reference. This Form 8-K
and Exhibit 99.1 contain statements intended as forward-looking statements,
which are subject to the cautionary statements set forth in the press release.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1 Press Release dated November 15, 2005
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ERGO SCIENCE CORPORATION
Date: November 15, 2005 By: /s/ Ling Kwok
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Ling Kwok
Vice President, Corporate Development