<PAGE>


                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  ---------

                                  FORM 10-K
(Mark One)

     |X|     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15() OF THE
             SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 2001

                                     -OR-

     |_|     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15() OF THE
             SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

           For the transition period from ____________ to ____________

                           Commission File No. 0-26988

                                   -----------

                           ERGO SCIENCE CORPORATION
            (Exact name of registrant as specified in its charter)

               Delaware                            04-3565746
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization)           Identification Number)

         790 Turnpike Street
     North Andover, Massachusetts
   (Address of principal executive                    01845
               offices)                            (Zip Code)

      Registrant's telephone number, including area code: (978) 689-0333

         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                     None

         SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         Common Stock, $.01 Par Value
                               (Title of Class)

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

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

    The aggregate market value of our common stock held by non-affiliates
(without admitting that any person whose shares are not included in such
calculation is an affiliate), based on closing sale price as reported on the
NASD's OTC Bulletin Board as of March 8, 2002, was approximately $10,304,612. As
of March 8, 2002, there were 7,149,578 outstanding shares of the registrant's
common stock.

<PAGE>

                                    PART I

ITEM 1. BUSINESS

      This Report contains forward-looking statements of the Company which
involve risks and uncertainties. Forward-looking statements reflect the
Company's current views with respect to future events. The Registrant's actual
results may vary materially and adversely from those anticipated, believed,
estimated or otherwise indicated. Important factors that could cause actual
results to differ materially include, without limitation, the factors set forth
below in "Risk Factors."

      In connection with the implementation of transfer restrictions on our
shares of common stock that became effective on October 19, 2001, the
outstanding shares of our common stock were reverse split on a one-for-two
basis. Unless otherwise indicated, all of the share and per share data in this
report reflect the effect of this reverse stock split.

                                   Overview

      Ergo Science is a company in transition. From our incorporation through
March 2001, we were engaged in the development of ERGOSET(R) tablets for the
treatment of type 2 diabetes. We are now working to sell our drug assets and to
purchase an established income-producing business.

      In March 2001 we decided that the next phase of the development of
ERGOSET(R) will be better undertaken by a company that has more experience
with human drug development and more resources for regulatory approval and
marketing than we do. We are currently seeking to acquire one or more
established businesses. We have substantial unrecognized tax benefits and
approximately $26 million in cash. We believe that the most advisable use of
these assets is the purchase of one or more established, income-generating
businesses. In part, this strategy will permit us to offset future tax
liability with our existing tax benefits. In light of our strategic
direction, we are also in the process of attempting to sell or license our
interests in ERGOSET(R) including our intellectual property rights and other
human drug related assets. If we enter into an agreement to dispose of any of
our human drug-related assets, we will seek stockholder approval for that
transaction only if it is required by Delaware or other applicable law or our
board of directors determines it is advisable to seek such approval.

      At our Annual Meeting of Stockholders held on October 15, 2001,
stockholders approved the imposition of transfer restrictions on our common
stock. These transfer restrictions were implemented on October 19, 2001. At that
annual meeting, stockholders also approved an arrangement by which we may issue
and sell up to 3,750,000 shares of our common stock to Court Square Capital
Limited, our largest stockholder, at a per share price of $2.30. During our
transition period, we intend to continue to conserve our cash and other assets.

      The Investment Company Act of 1940 requires registration as an
investment company for companies that are engaged primarily in the business
of investing, reinvesting, owning, holding or trading securities. Unless an
exclusion applies, a company is an investment company if it owns "investment
securities" with a value exceeding 40% of the value of its total assets on an
unconsolidated basis, excluding government securities and cash items. We have
relied on different exclusions available under the Act to avoid being
regulated as an investment company. However, since the third quarter of 2001,
the only securities we have held are U.S. government obligations with
maturities of 90 days or less. Since these are not "investment securities"
within the meaning of the Act, we do not meet the general definition of an
investment company. We expect to continue to hold similar securities
exclusively until we acquire an operating business.


                                       2
<PAGE>

Human Resources

      As of March 8, 2002, we had three part-time employees. None of our
employees is covered by a collective bargaining agreement.

                                 RISK FACTORS

    In addition to the other information in this Annual Report on Form 10-K and
all other SEC reports of the Company, you should consider the following factors
in evaluating the Company, its business and the strategic direction the Company
may head in the future.

We have relied on an exclusion from the definition of "investment company" that
may not have been available to us. We could therefore possibly be subject to
enforcement action by the SEC and could be required to register as an investment
company with significant restrictions on our business. Any one of these actions
would have a material adverse impact on our ability to acquire and operate an
established business.

    The Investment Company Act of 1940 requires registration as an investment
company for companies that are engaged primarily in the business of investing,
reinvesting, owning, holding or trading securities. Unless an exclusion applies,
a company is an investment company if it owns "investment securities" with a
value exceeding 40% of the value of its total assets on an unconsolidated basis,
excluding government securities and cash items. We currently are not an
investment company under this test because none of our assets are such
investment securities.

    However, from the time of our initial public offering through March 2001,
we relied on an exclusion available to companies that are engaged primarily
in a business other than investing. The SEC has established specific criteria
by which companies that are primarily engaged in research and development,
not investing, qualify for this exclusion. When we sold our pre-clinical
research assets in the second quarter of 1999 and moved to conserve our
assets for the development of ERGOSET through the FDA process, it raised a
regulatory issue as to whether we might need to register as an investment
company. There is a risk that the SEC could take the position that we did not
meet the requirements for this exclusion from the second quarter of 1999
through March 2001. The Investment Company Act also provides a one-year
temporary exclusion for companies that are in transition and which have a
bona fide intent to be engaged primarily in a business other than investing
in securities as soon as possible, but in any event within one year. We
relied on this temporary exclusion since we decided to sell our human
drug-related assets in March 2001 through the third quarter of 2001. There is
a risk that the SEC may take the position that we are not entitled to rely on
this temporary exclusion. In the event that we were not entitled to rely on
the exclusion prior to March 2001 or we were not entitled to rely on the
temporary exclusion beginning in March 2001, our failure to register as an
investment company not only raises the possibility of an enforcement action
by the SEC, but also threatens the validity of corporate actions and
contracts entered into by us during the period of violations. Since the third
quarter of 2001, the only securities we have held are U.S. government
obligations with maturities of 90 days or less, which provides a separate
exclusion for the "40 Act."

    Until we are able to achieve our goal of acquiring one or more established
operating businesses, we are unable to materially change the composition of our
assets without becoming subject to the Act. Registration as an investment
company would subject us to restrictions that would significantly impair our
ability to pursue our fundamental business strategy of acquiring and operating
at established business. As an investment company, we would be forced to comply
with substantive requirements of the Investment Company Act, including:

      o     limitations on our ability to borrow;
      o     limitations on our capital structure;
      o     restrictions on acquisitions of interests in associated companies;
      o     prohibitions on transactions with affiliates;


                                       3
<PAGE>

      o     restrictions on specific investments; and
      o     compliance with reporting, record keeping, voting, proxy disclosure
            and other rules and regulations.

    If we were forced to comply with the rules and regulations of the Investment
Company Act, our ability to acquire and operate an established business would be
significantly limited.

    If we are determined to have been an unregistered investment company when we
entered into the purchase agreement with Court Square, that agreement may not be
enforceable by us against Court Square. If we are or become an unregistered
investment company, we may be limited in our ability to issue any securities,
whether to Court Square under the purchase agreement, or pursuant to the 2001
Employee, Director and Consultant Stock Plan. Either of these events would
significantly limit our ability to acquire and operate a business.

We are a company in transition.

    We may not successfully make the transition from developing human drug
products to acquiring an income-producing business or pursuing another
strategic direction. Over the past few years, we have terminated nearly all
of our employees, including nearly all of our key employees. We may not have
adequate capital, human or other resources to pursue another line of
business. Capital, human and other resources may not be available from other
sources and, even if available, may not be available on terms that are
acceptable to us. Until we decide on a specific income-producing business to
acquire, or another strategic direction to pursue, we cannot predict the
nature or intensity of the competition that we will face.

Our common stock is subject to rules relating to low-priced or penny stock which
may make it more difficult for you to buy or sell shares and for us to enter
into future equity financings or to effect an acquisition or merger with other
businesses.

    Our common stock was delisted from the Nasdaq Stock Market effective with
the open of business on May 24, 2001. Our common stock currently is quoted on
the NASD's OTC Bulletin Board and may be adversely affected by an SEC rule that
imposes additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
which are generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. For transactions covered by the
rule, the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. Consequently, the rule may affect the ability of broker-dealers to
sell our common stock and also may affect the ability of holders of our common
stock to resell their shares of common stock. In addition, the continued
delisting of our common stock may make our stock less attractive to third
parties, which could adversely affect our ability to enter into future equity
financing transactions or to effect an acquisition or merger with other
businesses.

The transfer restrictions implemented in the merger may delay or prevent
takeover bids by third parties and may delay or frustrate any attempt by
stockholders to replace or remove the current management.

    The new shares of common stock issued by the Company in the merger are
subject to the transfer restrictions described in the proxy statement/prospectus
filed by the Company. These transfer restrictions will require any person
attempting to acquire a significant interest in the Company to negotiate with
the Company's board of directors. The transfer restrictions also may make it
more difficult to effect a merger or similar transaction perceived by
stockholders to be favorable to the Company by requiring any person seeking to
enter into such a transaction with the Company to negotiate with our Board of
Directors. Finally, the transfer restrictions may make it more difficult for
stockholders to replace current management because


                                       4
<PAGE>

no single stockholder may cast votes for more than 5% of the Company's
outstanding shares of common stock, unless that stockholder held more than 5% of
our common stock before the merger.

If the transfer restrictions are not effective in preventing an ownership change
from occurring, our ability to use the tax net operating loss carryforwards will
be severely limited.

    Although the transfer restrictions are expressly permitted under Delaware
law, we are not aware of any published court decisions enforcing similar
transfer restrictions. Even if a court did enforce our transfer restrictions in
the case of such a transfer, the Internal Revenue Service might not agree that
the transfer restrictions provide a sufficient remedy with respect to any
ownership change resulting from the prohibited transfer. In either of these
cases, despite the implementation of the transfer restrictions, an ownership
change could occur that would severely limit merger sub's ability to use the tax
benefits associated with our NOL carryforwards.

We may not be able to realize the benefits of our NOL carryforwards.

    Based on a current federal corporate income tax rate of 35%, our NOLs could
provide a benefit to us, if fully utilized, of as much as $27 million in future
tax savings. However, our ability to use these tax benefits in future years will
depend upon the amount of our otherwise taxable income. We may not be able to:

      o     identify an established business to acquire;
      o     reach an agreement to acquire any such business that we do identify
            on terms which are favorable to us; and
      o     obtain sufficient capital to consummate an acquisition.

    Each of these factors will limit our ability to use the tax benefits
associated with our substantial NOLs. If, for any of these reasons, we do not
have sufficient taxable income in future years to use the tax benefits before
they expire, we will lose the benefit of those NOL carryforwards permanently.

    In addition, the amount of NOL carryforwards that we have claimed has not
been audited or otherwise validated by the U.S. Internal Revenue Service. The
IRS could challenge our calculation of the amount of our NOLs or our
determinations as to when a prior change in ownership occurred and other
provisions of the Internal Revenue Code may limit our ability to carry forward
our NOLs to offset taxable income in future years. If the IRS were successful
with respect to any such challenge, the potential tax benefit of the NOL
carryforwards to us could be substantially reduced.

Because ownership of our common stock is concentrated, certain stockholders can
exert significant influence over stockholders' decisions.

    As of December 31, 2001, we believe that our largest stockholder, Court
Square, beneficially owned and had the right to vote approximately 22.9% of our
outstanding shares of common stock. If the maximum number of shares of common
stock are issued to Court Square under the purchase agreement, Court Square will
beneficially own and have the right to vote approximately 49.5% of our
outstanding shares. Accordingly, Court Square will have a significant influence
on the outcome of stockholder votes, including votes concerning, among other
things, the election of directors; the adoption or amendment of provisions in
our Certificate of Incorporation; and the approval of other significant
corporate transactions, including mergers, and reorganizations. This level of
concentrated ownership by a single entity may have the effect of delaying or
preventing a change in the management or voting control of the Company.

Anti-takeover provisions could impair market price of Ergo common stock.

    We have adopted certain anti-takeover measures. Our Certificate of
Incorporation:


                                       5
<PAGE>

      o     provides for staggered terms of office for directors;

      o     requires certain procedures to be followed and time periods to be
            met for any stockholder to propose matters to be considered at
            annual meetings of stockholders, including nominating directors for
            election at those meetings;

      o     prohibits stockholders from calling special meetings of
            stockholders; and

      o     authorizes the Board of Directors of the Company to issue up to
            10,000,000 shares of preferred stock without stockholder approval
            and to set the rights, preferences, and other designations,
            including voting rights, of those shares as the Board of Directors
            may determine.

These provisions, alone or in combination with each other and with the matters
described in "Risk Factors--Concentrated Ownership of our Common Stock Results
in Significant Influence Over Stockholders' Decisions," may discourage
transactions involving actual or potential changes of control. Such transactions
may include those that otherwise could involve payment of a premium over
prevailing market prices to holders of our common stock. Except with respect to
Court Square, we also are subject to provisions of the Delaware General
Corporation Law that may make some business combinations more difficult. We have
taken steps to help preserve our net operating loss carryforwards and reduce,
but not eliminate, the risk of the occurrence of an ownership change. These
steps under consideration may have the incidental effect of impeding the attempt
of a person or entity from acquiring a significant or controlling interest in
the Company, render it difficult to effect a merger or similar transaction even
if the transaction is favored by a majority of independent stockholders, and
entrenching management.

Forward Looking Statements and Associated Risks

    This Annual Report on Form 10-K contains forward-looking statements with
respect to our financial condition, results of operations and business. You can
find many of these statements by looking for such words as "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "will," "could,"
"may" or similar expressions. These statements reflect our current views with
respect to future events and financial performance and involve numerous
assumptions, risks and uncertainties, including without limitation, the risks
described in "Risk Factors." Because these forward-looking statements are based
upon assumptions and are subject to risks and uncertainties, actual results may
vary materially and adversely from those anticipated, believed, estimated,
assumed or otherwise indicated. We do not undertake to update any
forward-looking statement that may be made from time to time by or on behalf of
us.

ITEM 2. PROPERTIES

Facilities

    In September 2001 we leased approximately 600 square feet of shared office
space as our principal office in Jefferson Office Park, North Andover,
Massachusetts. The space is leased through June 30, 2002. Prior to that, we
leased a larger office space of approximately 1,200 square feet as its principal
office in the same location. That lease expired in September 2001.

ITEM 3. LEGAL PROCEEDINGS

    None.

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

    Our 2001 Annual Meeting of Stockholders was held on October 15, 2001. The
following matters were voted upon at the annual meeting (all of the share
numbers below reflect the effect of a one-for-two reverse stock split that
became effective on October 19, 2001):


                                       6
<PAGE>

(1) David R. Burt was elected to serve as a Director to hold office until our
next annual meeting of stockholders and until his successor is chosen and
qualified with 5,354,529 votes cast for and 669,178 votes withheld.

(2) Our stockholders approved a proposal to adopt a certificate of ownership
and merger, the primary purpose of which was to implement the transfer
restrictions on shares of our common stock and the one-for-two reverse stock
split. This proposal was approved with 4,225,186 votes for the proposal,
558,998 votes against the proposal, 43,468 abstentions and 2,392,111 broker
non-votes. The merger became effective on October 19, 2001.

(3) Our stockholders approved the issuance and sale of up to 3,750,000 shares of
our common stock at a per share price of $2.30 to Court Square Capital Ltd., our
largest stockholder. This proposal was approved with 4,214,891 votes for the
proposal, 568,473 votes against the proposal, 44,288 abstentions and 2,392,111
broker non-votes.

(4) Our stockholders approved the adoption of our 2001 Employee, Director and
Consultant Stock Plan and the reservation of 1,600,000 shares of our common
stock for options which may be granted under this plan. This proposal was
approved with 4,050,203 votes for the proposal, 730,681 votes against the
proposal, 46,768 abstentions and 2,392,111 broker non-votes.

(5) Our stockholders also ratified the appointment of PricewaterhouseCoopers LLP
as our independent public accountants for the fiscal year ending December 31,
2001. This proposal was approved with 5,584,740 votes for the proposal, 294,546
votes against the proposal, 144,422 abstentions and 0 broker non-votes.


                                       7
<PAGE>


                                   PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our common stock was quoted on the Nasdaq Stock Market through May 23, 2001
under the symbol "ERGO." Since that date, after a brief transition period during
which our common stock was quoted on the NASD's OTC Bulletin Board under the
symbol "ERGG," our common stock has been quoted on the NASD's OTC Bulletin Board
under the symbol "ERGO." At March 8, 2002, the number of record holders of our
common stock was approximately 240. The following table sets forth, for the
periods indicated, the high and low sale price for our common stock as reported
on the Nasdaq Stock Market or the NASD's OTC Bulletin Board, as applicable.

                                                  High         Low
                                                  ----         ---
2001
  First Quarter                                $   2.032   $   1.250
  Second Quarter                               $   2.120   $   1.562
  Third Quarter                                $   2.120   $   1.820
  Fourth Quarter*                              $   2.490   $   1.880
2000
  First Quarter                                $  10.750   $   2.500
  Second Quarter                               $   4.250   $   2.312
  Third Quarter                                $   2.938   $   2.062
  Fourth Quarter                               $   2.312   $   1.000

*This information reflects inter-dealer prices, without retail markup, mark-down
or commission and may not represent actual transactions.

Dividends

      We have not paid dividends to our stockholders since our inception. We
currently intend to retain earnings, if any, to finance our growth. The terms
of our series D exchangeable preferred stock prohibit us from paying
dividends on our common stock.


                                       8
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    The following table sets forth selected consolidated financial data for the
Company as of the dates and for the periods indicated. The data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes thereto included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                                       ------------------------
                                                  2001            2000            1999            1998            1997
                                                  ----            ----            ----            ----            ----
<S>                                          <C>             <C>             <C>                <C>          <C>
Consolidated Statement of Operations Data:
Revenues (1)                                            --              --              --   $  18,924,552              --
Operating expenses:
   Research and development (2)              $      55,454   $    (163,834)  $   2,269,450      14,549,810   $  13,258,016
   Cost of product revenue                                              --              --       2,488,520              --
   Write-off related to renegotiated supply
       agreement (3)                                                    --              --       2,499,000              --
   General and administrative (4)(5)(6)          2,456,332       1,748,301       3,597,382       7,558,572       6,973,776
                                             -----------------------------------------------------------------------------

   Total operating expenses                      2,511,786       1,584,467       5,866,832      27,095,902      20,231,792
                                             -----------------------------------------------------------------------------

Other Income:
   Interest and other income                     1,260,964       1,920,922       1,628,206       1,862,453       1,689,252
                                             -----------------------------------------------------------------------------

      Net income (loss)                         (1,250,822)        336,455      (4,238,626)     (6,308,897)    (18,542,540)
                                             =============================================================================

      Net loss per share
         basic (7) (9)                       $       (0.18)  $        0.05   $       (0.59)  $       (0.97)  $       (2.81)
                                             =============================================================================
         assuming dilution (7) (9)           $       (0.18)  $        0.05   $       (0.59)  $       (0.97)  $       (2.81)
                                             =============================================================================

Weighted average common shares outstanding
         basic (8)                               7,149,578       7,146,209       7,127,912       7,043,959       6,606,021
                                             =============================================================================
         assuming dilution (8)                   7,149,578       7,181,780       7,127,912       7,043,959       6,606,021
                                             =============================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                                       ------------------------
                                                  2001            2000            1999            1998            1997
                                                  ----            ----            ----            ----            ----
<S>                                          <C>             <C>             <C>                <C>          <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents                    $  25,808,028   $  10,130,599   $   4,292,631   $  15,715,708   $  13,923,115
Investments                                             --      16,958,488      26,047,124      17,997,599       9,536,995
Working capital                                 24,888,851      26,124,695      18,431,622      29,563,042      20,943,195
Total assets                                    25,823,201      27,129,619      30,409,901      34,724,868      28,664,666
Long-term obligations                                   --              --              --         155,596         327,442
Total stockholders' equity                      24,895,666      26,146,488      25,786,233      29,825,882      25,135,381
</TABLE>

-----------
(1)   Relates to revenue received from Johnson & Johnson in 1998 in accordance
      with the Joint Collaboration and License Agreement. See Note 9 of Notes to
      Consolidated Financial Statements.

(2)   Includes adjustments to estimates of amounts required to settle ERGOSET(R)
      related obligations in 2000, offset by a $2 million charge as part of the
      LSU settlement.

(3)   See Note 8 of Notes to Consolidated Financial Statements.

(4)   Includes noncash charges in 1997 totaling $647,413 related to the
      resignation of a senior executive.

(5)   Includes a charge in 1998 of $1,042,290 related to an asset write-down of
      equipment and leasehold improvements.

(6)   Includes a loss on the disposal of equipment in 2001 and 1999 in the
      amount of $3,201 and $157,000, respectively. See Note 3 of Notes to
      Consolidated Financial Statements.

(7)   We have never paid cash dividends on our common stock other than
      distributions made to stockholders when we were owned only by individuals
      and had elected to be an S corporation for U.S. federal income tax
      purposes.

(8)   Share amounts reflect the 1 for 2 reverse stock split that occurred on
      October 19, 2001.

(9)   Amounts for all periods have been revised as discussed in Note 1 of Notes
      to Consolidated Financial Statements.


                                       9
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      This discussion contains forward-looking statements. Forward-looking
statements reflect Ergo's current views with respect to future events. Actual
results may vary materially and adversely from those anticipated, believed,
assumed, estimated or otherwise indicated. Important factors that could cause
actual results to differ materially include, without limitation:

      o     we are a company in transition;

      o     we may not be able to identify or complete an acquisition of a
            suitable established business on favorable terms and, if acquired,
            that business may not generate sufficient income to realize the
            benefits of our net operating loss carryforwards;

      o     our common stock is subject to rules relating to low-priced or penny
            stock, which may make it more difficult for our stockholders to buy
            or sell shares and for us to enter into future equity financings or
            to effect an acquisition or merger with other businesses;

      o     the transfer restrictions implemented in the merger may delay or
            prevent takeover bids by third parties and may delay or frustrate
            any attempt by our stockholders to replace or remove the current
            management and

      o     we believe that we have qualified for exclusions from the definition
            of "investment company"' under the Investment Company Act of 1940 at
            all relevant times since our incorporation; however, if the
            Securities and Exchange Commission takes a contrary position and
            prevails, we would be subject to significant restrictions on our
            business and on our ability to implement our acquisition strategy.

                                  Overview

      Ergo Science is a company in transition. From our incorporation through
March 2001, we were engaged in the development of ERGOSET(R) tablets for the
treatment of type 2 diabetes. We are now working to sell our drug assets and to
purchase an established income-producing business.

      In March 2001 we decided that the next phase of the development of
ERGOSET(R) will be better undertaken by a company that has more experience
with human drug development and more resources for regulatory approval and
marketing than we do. We are currently seeking to acquire one or more
established businesses. We have substantial unrecognized tax benefits and
approximately $26 million in cash. We believe that the most advisable use of
these assets is the purchase of one or more established, income-generating
businesses. In part, this strategy will permit us to offset future tax
liability with our existing tax benefits. In light of our strategic
direction, we are also in the process of attempting to sell or license our
interests in ERGOSET(R) including our intellectual property rights and other
human drug related assets. If we enter into an agreement to dispose of any of
our human drug-related assets, we will seek stockholder approval for that
transaction only if it is required by Delaware or other applicable law or our
board of directors determines it is advisable to seek such approval.

      At our Annual Meeting of Stockholders held on October 15, 2001,
stockholders approved the imposition of transfer restrictions on our common
stock. These transfer restrictions were implemented on October 19, 2001. At that
annual meeting, stockholders also approved an arrangement by which we may


                                       10
<PAGE>

issue and sell up to 3,750,000 shares of our common stock to Court Square
Capital Limited, our largest stockholder, at a per share price of $2.30. During
our transition period, we intend to continue to conserve our cash and other
assets. The only securities we currently hold are U. S. Government obligations
with maturities of 90 days or less. We expect to continue to hold similar
securities exclusively until we acquire an operating business.

      From our inception through 2001, the Company has been unprofitable.

Critical Accounting Policies

      Our significant accounting policies are discussed in Note 1 of our audited
financial statements, which are included in this Form 10-K. We believe that the
most significant judgements involve the establishment of accruals at each
balance sheet date.

REVISION OF PRIOR FINANCIAL STATEMENTS

      In February 2002, prior to issuance of the Form 10K, we became aware
that the amount of reported net loss to common shareholders in 2000 and 1999
required revision. This revision involved the elimination of the accretion of
dividends on the Series D Preferred Stock for all periods subsequent to our
initial public offering, or IPO, in December 1995. The dividends on the
Series D Preferred Stock had been accreted at the rate of 6% compounded
semi-annually from the time of issuance in April 1995 and such accretion had
been reflected as an adjustment to net loss to determine net loss to common
stockholders. However, upon completion of our IPO, the Series D Preferred
Stock was no longer redeemable. After the Series D Preferred Stock became
permanent equity, dividends on the preferred stock are only accounted for
when and if declared by the Board of Directors. This revision did not affect
net income or loss as previously reported; however, as a result of this
revision, the previously reported net loss to common shareholders for the
year ended December 31, 2000 has been changed by $554,000 to become net
income available to common shareholders, and the previously reported net loss
to common shareholders for the year ended December 31, 1999 has been
decreased by $552,202.

      We have also revised our balance sheet as of December 31, 2000 and our
statement of stockholders' equity for the years ended December 31, 1999 and
2000. We reduced the carrying value of the Series D Preferred Stock and the
Cumulative Dividends on Preferred Stock to reflect only the accretion of
dividends on Series D Preferred Stock through the IPO.

Results of Operations

Years ended December 31, 2000 and 2001

      Research and development expenses increased from ($163,834) to $55,454 in
2000 and 2001, respectively. The increase in costs in 2001 was primarily a
result of the reversal of accrued ERGOSET(R) related development costs of
$2,230,000 in the third quarter of 2000, which were offset by the effect of the
discontinuation of pre-clinical programs. These development costs were
originally accrued in 1998 and were reversed in 2000 because we no longer
believed we would have to pay them, resulting in a negative charge to research
and development expenses. Also, in the third quarter of 2000, we recorded a $2
million charge to research and development expenses as a result of the
settlement with LSU.

      General and administrative expenses increased from $1,748,301 to
$2,456,332 in 2000 and 2001, respectively. The increase was principally due to
legal costs and professional fees incurred in evaluating our strategic
alternatives, in preparing a proxy statement for our annual meeting of
stockholders and in undertaking efforts to implement our strategic plan. In
particular, in 2001 we incurred legal costs and professional fees related to our
effort to remain listed on the Nasdaq Stock Market, adoption of a new stock
option plan, negotiating a common stock purchase agreement with Court Square
Capital Limited, attempting to sell or license our interest in ERGOSET(R) and
our other human drug related assets and implementing the stock transfer
restrictions.

      Interest and other income decreased from $1,920,922 to $1,260,964 in 2000
and 2001, respectively. The decrease in interest income is primarily due to the
decrease of cash available for investment. Interest income also decreased due to
a general reduction in market interest rates.

      Net (loss) income decreased from $336,455 to ($1,250,822) in 2000 and
2001, respectively. The decrease in net income was mainly due to increased
legal and other professional fees incurred by us in preparing the Proxy with
the SEC, in evaluating our strategic alternatives and the process of
attempting to sell or license its interest in ERGOSET(R) and other human drug
related assets. Net income (loss) per common share decreased from $0.05 to
($0.18) in 2000 and 2001, respectively.

Years ended December 31, 1999 and 2000

      Research and development expenses decreased from $2,269,450 to ($163,834)
in 1999 and 2000, respectively. The reduction in costs in 2000 is a result of
our decision to discontinue funding of all of our preclinical development
programs, and a change in estimate of amounts required to settle ERGOSET(R)
related development obligations, offset by a $2 million charge as part of the
settlement with LSU.

      General and administrative expenses decreased from $3,597,382 to
$1,748,301 in 1999 and 2000, respectively. The decrease was principally due to
operating the Company for all of fiscal 2000 with a


                                       11
<PAGE>

reduced work force stemming from our decision in 1999 to reduce our the work
force because of the aforementioned FDA not-approvable letter.

      Interest and other income increased from $1,628,206 to $1,920,922 in 1999
and 2000, respectively. The increase in interest income is attributable to
extending the maturity dates on our investments and an increase in interest
rates on our short-term investments.

      Net income (loss) increased from ($4,238,626) to $336,455 in 1999 and
2000, respectively. The increase in net income was mainly due to the reduction
in our workforce, the our decision to discontinue funding of our pre-clinical
development program, a change in estimate of amounts required to settle
ERGOSET(R) related development obligations, offset by a $2 million charge as
part of the settlement with LSU. Net income (loss) per share increased from
($0.59) to $0.05 in 1999 and 2000, respectively.

Net Operating Loss Carryforwards

      At December 31, 2001, we reported federal net operating loss and research
and experimentation carryforwards were approximately $80 million. If not used,
the tax loss carryforwards will begin to expire in 2006. Our ability to use
these carryforwards is subject to limitations resulting from, among other
things, an ownership change as defined in the Internal Revenue Code sections 382
and 383. See Note 6 of Notes to Consolidated Financial Statements.

Liquidity and Capital Resources

Resources

      Since our inception, our primary source of cash has been from financing
activities, which have consisted of private placements of equity securities, two
public offerings, and the sale of common stock in conjunction with the Joint
Collaboration Agreement. Private placements of equity securities provided us
with aggregate proceeds of $42,999,000 through 1998.

      On February 23, 1998, we entered into the Joint Collaboration Agreement
with Johnson & Johnson to develop and commercialize ERGOSET(R) tablets as well
as other potential collaboration products for the treatment of type 2 diabetes
and obesity. In March 1998, Johnson & Johnson made payments to us totaling $20
million, including payment of a $10 million license fee and the purchase of $10
million of our common stock. The agreement was terminated by Johnson & Johnson
on January 3, 1999.

      On May 23, 2001, we entered into a common stock purchase agreement with
Court Square Capital Limited, the Company's largest stockholder, to provide us
with additional capital for general corporate purposes, including the
acquisition of one or more new lines of business. Subject to certain conditions,
including stockholder approval, the agreement provides for us to issue and sell
to Court Square 3,750,000 shares at a per share price of $2.30, subject to
adjustment. The agreement expires on May 23, 2003.

      Cash, cash equivalents and short-term investments were $27,089,087 and
$25,808,028 at December 31, 2000 and 2001, respectively. The overall decrease in
cash, cash equivalents and short-term investments at December 31, 2001 compared
to one year prior was due primarily to the payment of legal costs and
professional fees incurred in evaluating our strategic alternatives, in
preparing a proxy statement for our annual meeting of stockholders and in
undertaking efforts to implement our strategic plan. In particular, in 2001 we
incurred legal costs and professional fees related to our effort to remain
listed on the Nasdaq Stock Market, adoption of a new stock option plan,
negotiating a common stock purchase agreement with Court Square Capital Limited,
attempting to sell or license our interest in ERGOSET(R) and our other human
drug related assets and implementing the stock transfer restrictions.

      Our primary source of cash in 2001 resulted from interest generated by our
investment of cash, cash equivalents and short-term investments. Barring
unforeseen circumstances, we expect interest income to


                                       12
<PAGE>

continue to be our primary source of cash until we decide upon, and implement
steps to pursue, a new future strategic direction. The only securities we
currently hold are U.S. Government obligations with maturities of 90 days or
less. We expect to continue to hold similar securities exclusively until we
acquire an operating business.

      We have concentrated our efforts on conserving our cash while we have been
considering our strategic alternatives. However, our use of cash has fluctuated
significantly from quarter to quarter and we anticipate that this pattern may
continue.

Requirements

      Our primary use of cash to date has been in operating activities to fund
research and development, including preclinical studies and clinical trials, and
general and administrative expenses and in evaluating and implementing strategic
alternatives.

      As described above, we are in transition and our Board of Directors is
considering strategic alternatives with a view towards re-positioning us so as
to preserve and enhance shareholder value. We are seeking to acquire one or more
existing businesses that are income-producing or are reasonably likely to
produce income. Our acquisition of one or more businesses may use all of our
current capital and may require significant additional capital. We are also
taking steps which may lead to the sale or license of our interests in our
human drug related assets.

      We expect that (in the absence of an acquisition or other strategic
change) our available cash and expected interest income will fund our current
operations for the foreseeable future. Our capital requirements will depend, in
part, on our ability to sell our interests in our human drug related assets, the
amount of proceeds realized by us from any such sale or license, our ability to
complete the acquisition of an operating business, the amount we are required to
pay for such an acquisition, the nature of the financing we employ to pay for
such an acquisition, the capital requirements of the business acquired and the
amount of income generated by the business.

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

      The terms of our series D exchangeable preferred stock prohibit us from
paying dividends on our common stock.

New Accounting Pronouncements

      In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that
all business combinations be accounted for under the purchase method only and
that certain acquired intangible assets in a business combination be recognized
as assets apart from goodwill. SFAS No. 142 requires that ratable amortization
of goodwill be replaced with periodic tests of the goodwill's impairment and
that intangible assets other than goodwill be amortized over their useful lives.
SFAS No. 141 is effective for all business combinations initiated after June 30,
2001 and for all business combinations accounted for by the purchase method for
which the date of acquisition is after June 30, 2001. The provisions of SFAS No.
142 will be effective for fiscal years beginning after December 15, 2001, and
thus will be adopted by the Company, as required, as


                                       13
<PAGE>

of January 1, 2002. SFAS No. 141 and SFAS No. 142 will not affect the Company's
financial position or results of operations upon adoption.

      In August 2001, FASB issued SFAS 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets." SFAS 143 provides the
accounting requirements for retirement obligations associated with tangible
long-lived assets. SFAS 143 is effective for financial statements for fiscal
years beginning after June 15, 2002. The Company has determined that SFAS 143
will not have an impact on its financial position and results of operations.

      In October 2001, FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 requires one method of accounting for
long lived assets disposed of by sale. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001. SFAS 144
did not affect the Company's financial position or results or operations upon
adoption.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      We are not subject to market risk associated with risk sensitive
institutions as we do not invest in institutions that are not United States
government institutions and do not enter into hedging transactions.


                                       14
<PAGE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

                                                                         Page No
                                                                         -------
Index to Consolidated Financial Statements

Report of Independent Accountants ........................................... 16

Consolidated Balance Sheets as of December 31, 2001 and 2000 ................ 17

Consolidated Statements of Operations for the years ended December 31,
2001, 2000 and 1999 ......................................................... 18

Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000 and 1999 ......................................................... 19

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2001, 2000 and 1999 ............................................ 20

Notes to Consolidated Financial Statements .................................. 21


                                       15
<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Ergo Science Corporation:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of
Ergo Science Corporation and its subsidiaries (the "Company") at December 31,
2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the accompanying consolidated financial statements,
the Company has revised its financial statements for the years ended December
31, 2000 and 1999 to eliminate accretion of preferred stock.

                                          /s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
February 22, 2002


                                       16
<PAGE>

                            ERGO SCIENCE CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                          December 31,
                                                                                                          ------------
                                                                                                       2001            2000
                                                                                                       ----            ----
<S>                                                                                               <C>             <C>
                                                 ASSETS
Current assets:
   Cash and cash equivalents                                                                      $  25,808,028   $  10,130,599
   Short-term investments                                                                                    --      16,958,488
   Prepaid and other current assets                                                                       8,358          18,739
                                                                                                  -----------------------------
          Total current assets                                                                       25,816,386      27,107,826
Equipment, net                                                                                            6,815          21,793
                                                                                                  -----------------------------
          Total assets                                                                            $  25,823,201   $  27,129,619
                                                                                                  ==============================

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses                                                          $     927,535   $     983,131
                                                                                                  -----------------------------
          Total current liabilities                                                                     927,535         983,131

Commitments and contingencies (Notes 5, 8 and 10)                                                                --              --

Stockholders' equity:
   Preferred stock, $.01 par value, 10,000,000 shares authorized; 6,903 shares
      of Series D exchangeable preferred stock issued and outstanding at
      December 31, 2001 and 2000 (liquidation
      preference of $10,238,660 at December 31, 2001) (Revised)                                       4,306,520       4,306,520
   Common stock, $.01 par value, authorized 50,000,000 shares at December 31, 2001
      and 2000; 7,149,578 shares issued and outstanding at
      December 31, 2001 and 2000, respectively                                                           71,496          71,496
   Additional paid-in capital                                                                       111,880,321     111,880,321
   Cumulative dividends on preferred stock (Revised)                                                 (2,296,953)     (2,296,953)
   Accumulated deficit                                                                              (89,065,718)    (87,814,896)
                                                                                                  -----------------------------
       Total stockholders' equity                                                                    24,895,666      26,146,488
                                                                                                  -----------------------------
          Total liabilities and stockholders' equity                                              $  25,823,201   $  27,129,619
                                                                                                  =============================
</TABLE>

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


                                       17
<PAGE>

                            ERGO SCIENCE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                Years Ended December 31,
                                                                                                ------------------------
                                                                                         2001             2000             1999
                                                                                         ----             ----             ----
<S>                                                                                   <C>              <C>              <C>
Operating expenses:
   Research and development                                                           $    55,454      $  (163,834)     $ 2,269,450
   General and administrative                                                           2,456,332        1,748,301        3,597,382
                                                                                      ---------------------------------------------
                                                                                        2,511,786        1,584,467        5,866,832
                                                                                      ---------------------------------------------

Other income
   Interest and other income                                                            1,260,964        1,920,922        1,628,206
                                                                                      ---------------------------------------------
          Net income (loss)                                                            (1,250,822)         336,455       (4,238,626)
                                                                                      =============================================

Net income (loss) per common share (revised):

                    Basic                                                             $     (0.18)     $      0.05      $     (0.59)
                                                                                      =============================================
                    Diluted                                                           $     (0.18)     $      0.05      $     (0.59)
                                                                                      =============================================

Weighted average common shares outstanding (revised):
                    Basic                                                               7,149,578        7,146,209        7,127,912
                                                                                      =============================================
                    Diluted                                                             7,149,578        7,181,780        7,127,912
                                                                                      =============================================
</TABLE>

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


                                       18
<PAGE>

                            ERGO SCIENCE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                            Years Ended December 31,
                                                                             ------------------------------------------------------
                                                                                 2001                 2000                 1999
                                                                             ------------------------------------------------------
<S>                                                                          <C>                  <C>                  <C>
Cash flows from operating activities:
   Net (loss) income                                                         $ (1,250,822)        $    336,455         $ (4,238,626)
    Adjustments to reconcile net loss to cash (used in)
      operating activities:
          Depreciation and amortization                                             9,857               25,231               27,936
          Loss on disposal of equipment                                             3,201                   --              157,332
          Noncash compensation                                                         --                   --              186,977
   Changes in operating assets and liabilities:
        Prepaid and other current assets                                           10,381                8,330              566,056
        Other assets                                                                   --                3,318               47,995
        Accounts payable and accrued expenses                                     (55,596)          (3,640,537)             146,414
                                                                             ------------------------------------------------------

Net cash (used in) operating activities                                        (1,282,979)          (3,267,203)          (3,105,916)
                                                                             ------------------------------------------------------

Cash flows from investing activities:
   Purchase of short-term investments                                         (39,265,526)         (46,870,113)         (57,191,062)
   Purchase of long term investments                                                   --                   --           (7,311,534)
   Proceeds from maturity of short-term investments                            56,224,014           54,993,551           56,453,071
   Proceeds from maturity of long-term investments                                     --              965,198                   --
   Purchase of equipment and leasehold improvements                                    --               (7,265)            (136,949)
   Net proceeds received on sale of equipment                                       1,920                   --              279,045
                                                                             ------------------------------------------------------

Net cash provided by (used in) investing activities                            16,960,408            9,081,371           (7,907,429)
                                                                             ------------------------------------------------------
Cash flows from financing activities:
   Principal payments under capital lease obligations                                  --                   --             (421,732)
   Proceeds from stock option exercise                                                 --               23,800               12,000
                                                                             ------------------------------------------------------

Net cash provided by (used in) financing activities                                    --               23,800             (409,732)
                                                                             ------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                           15,677,429            5,837,968          (11,423,077)
Cash and cash equivalents at beginning of period                               10,130,599            4,292,631           15,715,708
                                                                             ------------------------------------------------------

Cash and cash equivalents at end of period                                   $ 25,808,028         $ 10,130,599         $  4,292,631
                                                                             ======================================================
</TABLE>

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


                                       19
<PAGE>

                            ERGO SCIENCE CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                           Cumulative
                                                                                          Dividends on
                                                                              Additional    Preferred
                                  Preferred Stock                              Paid-In        Stock     Deferred     Accumulated
                                     (Revised)              Common Stock       Capital      (Revised)  Compensation    Deficit
                                     ---------              ------------       -------      ---------  ------------    -------
                                   Shares     Amount       Shares   Amount
                                   ------     ------       ------   ------
<S>                                <C>     <C>           <C>        <C>      <C>           <C>           <C>         <C>
Balance at December 31, 1998       6,903   $ 4,306,520   7,127,203  $71,272  $112,048,336  $(2,296,953)  $(390,568)  $(83,912,725)

Exercise of stock options                                    7,500       75        11,925

Cancellation of compensatory
    of stock option grants                                                       (203,591)                 203,591

Amortization of deferred
    compensation                                                                                           186,977

Net loss for period                                                                                                    (4,238,626)
                                   ----------------------------------------------------------------------------------------------

Balance at December 31, 1999       6,903     4,306,520   7,134,703   71,347   111,856,670   (2,296,953)         --    (88,151,351)

Exercise of stock options                                   14,875      149        23,651

Net income for period                                                                                                     336,455
                                   ----------------------------------------------------------------------------------------------

Balance at December 31, 2000       6,903     4,306,520   7,149,578   71,496   111,880,321   (2,296,953)         --    (87,814,896)

Net loss for period                                                                                                    (1,250,822)
                                   ----------------------------------------------------------------------------------------------

Balance at December 31, 2001       6,903   $ 4,306,520   7,149,578  $71,496  $111,880,321  $(2,296,953)  $      --   $(89,065,718)
                                   ==============================================================================================

<CAPTION>
                                   Total
                                Stockholders'
                                   Equity
                                   ------
<S>                              <C>
Balance at December 31, 1998     $29,825,882

Exercise of stock options             12,000

Cancellation of compensatory
    of stock option grants                --

Amortization of deferred
    compensation                     186,977

Net loss for period               (4,238,626)
                                 -----------

Balance at December 31, 1999      25,786,233

Exercise of stock options             23,800

Net income for period                336,455
                                 -----------

Balance at December 31, 2000     $26,146,488

Net loss for period               (1,250,822)
                                 -----------

Balance at December 31, 2001     $24,895,666
                                 ===========
</TABLE>

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


                                       20
<PAGE>

                           ERGO SCIENCE CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Overview and Summary of Significant Accounting Principles

      In connection with the implementation of transfer restrictions on our
shares of common stock that became effective on October 19, 2001, the
outstanding shares of our common stock were reverse split on a one-for-two
basis. Unless otherwise indicated, all of the share and per share data in this
report reflect the effect of this reverse stock split.

    Background and Recent Events

      Ergo Science is a company in transition. From our incorporation through
March 2001, we were engaged in the development of ERGOSET(R) tablets for the
treatment of type 2 diabetes. We are now working to sell our drug assets and to
purchase an established income-producing business.

      In March 2001 we decided that the next phase of the development of
ERGOSET(R) will be better undertaken by a company that has more experience
with human drug development and more resources for regulatory approval and
marketing than we do. We are currently seeking to acquire one or more
established businesses. We have substantial unrecognized tax benefits and
approximately $26 million in cash. We believe that the most advisable use of
these assets is the purchase of one or more established, income-generating
businesses. In part, this strategy will permit us to offset future tax
liability with our existing tax benefits. In light of our strategic
direction, we are also in the process of attempting to sell or license our
interests in ERGOSET(R) including our intellectual property rights and other
human drug related assets. If we enter into an agreement to dispose of any of
our human drug-related assets, we will seek stockholder approval for that
transaction only if it is required by Delaware or other applicable law or our
board of directors determines it is advisable to seek such approval.

      At our Annual Meeting of Stockholders held on October 15, 2001,
stockholders approved the imposition of transfer restrictions on our common
stock. These transfer restrictions were implemented on October 19, 2001. At that
annual meeting, stockholders also approved an arrangement by which we may issue
and sell up to 3,750,000 shares of our common stock to Court Square Capital
Limited, our largest stockholder, at a per share price of $2.30. During our
transition period, we intend to continue to conserve our cash and other assets.
The only securities we currently hold are U. S. Government obligations with
maturities of 90 days or less. We expect to continue to hold similar securities
exclusively until we acquire an operating business.

    Organization

    Ergo Science Development Corporation ("ESDC") was incorporated on January
23, 1990. ESDC operated as an S Corporation from inception to September 10,
1992, when it converted to a C Corporation. In April 1995, ESDC went through a
recapitalization whereby all the stock of ESDC was exchanged on a one-for-one
basis for an equal amount of stock in Ergo Science Holdings, Incorporated,
previously a wholly owned subsidiary of ESDC. Subsequent to the
recapitalization, Ergo Science Holdings, Incorporated changed its name to Ergo
Science Corporation ("Ergo" or the "Company"). The consolidated financial
statements include the accounts of the Company and its subsidiaries, all of
which are wholly owned. All intercompany accounts and transactions are
eliminated upon consolidation.

    Research and Development Costs


                                       21
<PAGE>

    Research and development costs are expensed as incurred.

    Cash Equivalents and Investments

    The Company considers all highly liquid investments with maturity of 90 days
or less at the date of purchase to be cash equivalents.

    All debt securities are classified as held-to-maturity as the Company has
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost.

    At December 31, 2001, the Company's cash equivalents consisted only of
investments in money market funds and U.S. Government obligations that mature
within 90 days of purchase. At December 31, 2000 cash equivalents were composed
primarily of investments in money market funds, United States Government
obligations and commercial paper that matured within 90 days of purchase.

    Use of Estimates

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that effect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statement and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.

    Net Loss Per Common Share

    Basic earnings (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding for the
period. Diluted earnings per common share is computed by dividing net income
by the sum of the weighted average number of common shares outstanding for
the period plus the assumed exercise of all dilutive securities, such as
stock options. For the year ended December 31, 2000, a total of 35,571 stock
option shares, were included in the weighted average number of common shares
outstanding calculation.

    The diluted loss per common share calculated for the years ended December
31, 2001 and 1999, excludes the effects of 214,375 and 440,113 options
outstanding, respectively. These amounts are excluded, as their inclusion would
be anti-dilutive.

    Equipment

    Equipment is stated at cost. Depreciation is calculated using straight-line
basis over a 2 to 7 year estimated useful life. Repairs and maintenance costs
are charged to expense as incurred. Upon retirement or sale, the cost of the
assets disposed of and the related accumulated depreciation are removed from the
accounts and any resulting gain or loss is included in the determination of net
income. The Company sold in auction substantially all of its lab and office
equipment in the second quarter of 1999.

    Income Taxes

    Deferred tax liabilities and assets are recognized based on temporary
differences between the financial statement basis and tax basis of assets and
liabilities using current statutory tax rates. A valuation allowance against net
deferred tax assets is established if, based on the available evidence, it is
more likely than not that some or all of the deferred tax assets will not be
realized. (See Note 6).

    Comprehensive Income


                                       22
<PAGE>

    Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," establishes a standard for reporting and displaying
comprehensive income and its components within the financial statements.
Comprehensive income (loss) includes net income (loss) at December 31, 2001 and
2000.

    Reclassifications

    Certain prior year amounts have been reclassified to conform with the
current year's presentation. Such reclassifications had no effect on the
Company's results of operations.

    New Accounting Pronouncements

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that
all business combinations be accounted for under the purchase method only and
that certain acquired intangible assets in a business combination be recognized
as assets apart from goodwill. SFAS No. 142 requires that ratable amortization
of goodwill be replaced with periodic tests of the goodwill's impairment and
that intangible assets other than goodwill be amortized over their useful lives.
SFAS No. 141 is effective for all business combinations initiated after June 30,
2001 and for all business combinations accounted for by the purchase method for
which the date of acquisition is after June 30, 2001. The provisions of SFAS No.
142 will be effective for fiscal years beginning after December 15, 2001, and
thus will be adopted by the Company, as required, as of January 1, 2002. SFAS
No. 141 and SFAS No. 142 will not affect the Company's financial position or
results of operations upon adoption.

    In August 2001, FASB issued SFAS 143, "Accounting for Obligations Associated
with the Retirement of Long-Lived Assets." SFAS 143 provides the accounting
requirements for retirement obligations associated with tangible long-lived
assets. SFAS 143 is effective for financial statements for fiscal years
beginning after June 15, 2002. The Company has determined that SFAS 143 will not
have an impact on its financial position and results of operations.

    In October 2001, FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 requires one method of accounting for
long lived assets disposed of by sale. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001. SFAS 144
will not affect the Company's financial position or results or operations upon
adoption.

    Revision of Prior Financial Statements

    In February 2002, prior to issuance of the Form 10K, the Company became
aware that the amount of reported net loss to common shareholders in 2000 and
1999 required revision. This revision involved the elimination of the
accretion of dividends on the Series D Preferred Stock for all periods
subsequent to the Company's initial public offering, or IPO, in December
1995. The dividends on the Series D Preferred Stock (Note 8) had been
accreted at the rate of 6% compounded semi-annually from the time of issuance
in April 1995 and such accretion had been reflected as an adjustment to net
loss to determine net loss to common stockholders. However, upon completion
of the Company's IPO, the Series D Preferred Stock was no longer redeemable.
After the Series D Preferred Stock became permanent equity, dividends on the
preferred stock are only accounted for when and if declared by the Board of
Directors. This revision did not affect net income or loss as previously
reported; however, as a result of this revision, the previously reported net
loss to common shareholders for the year ended December 31, 2000 has been
changed by $554,000 to become net income available to common shareholders,
and the previously reported net loss to common shareholders for the year
ended December 31, 1999 has been decreased by $552,202.

    The Company has also revised its balance sheet as of December 31, 2000 and
its statement of stockholders' equity for the years ended December 31, 1999 and
2000. The Company reduced the carrying value of the Series D Preferred Stock and
the Cumulative Dividends on Preferred Stock to reflect only the accretion of
dividends on Series D Preferred Stock through the IPO.


                                       23
<PAGE>

    Accordingly, the financial statements for the years ended December 31, 2000
and 1999 have been revised as follows:

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                   2000                         1999
                                                         As reported    As revised   As reported    As revised
<S>                                                       <C>           <C>           <C>           <C>
Consolidated statement of operations:
           Accretion of dividends on preferred stock     $  (554,000)           --   $  (522,202)           --
           Net income (loss) to common stockholders         (217,545)  $   336,455    (4,760,828)  $(4,238,626)
           Net income (loss) per common share (basic)          (0.03)         0.05         (0.67)        (0.59)
           Net income (loss) per common share (diluted)        (0.03)         0.05         (0.67)        (0.59)

Consolidated balance sheet:
          Preferred stock                                  6,776,250     4,306,520     6,222,250     4,306,520
          Cumulative dividends on preferred stock         (4,766,683)   (2,296,953)   (4,212,683)   (2,296,953)

Consolidated statement of stockholders' equity:
          Accretion of dividends on preferred stock         (554,000)           --      (522,202)           --
</TABLE>

2. Short-term Investments

      The following is a summary of held-to-maturity securities not classified
as cash and cash equivalents as of December 31:

                                               2001                 2000
                                               ----                 ----
Commercial paper                        $                --  $         9,504,011
Federal agency notes                                     --            7,454,477
                                       -----------------------------------------
Total short-term investments            $                --  $        16,958,488
                                       =========================================

      Since held-to-maturity securities are short-term in nature, changes in
market interest rates would not have a significant impact on fair value of these
securities. These securities are carried at amortized cost, which approximates
fair value. All short-term investments at December 31, 2000 matured within 365
days of December 31, 2000.

3. Equipment

      Equipment consists of the following at December 31:

                                                          2001           2000
                                                          ----           ----
Furniture and equipment                                 $ 42,608       $ 74,961
Accumulated depreciation and amortization                (35,793)       (53,168)
                                                        -----------------------
Equipment, net                                          $  6,815       $ 21,793
                                                        =======================


                                       24
<PAGE>

      Depreciation expense for the years ended December 31, 2001, 2000 and 1999
was $9,857, $25,231, and $27,936, respectively. The Company disposed of
furniture and equipment in the third quarter of 2001, resulting in a loss of
$3,201, which is a component of general and administrative expense on the
statement of operations. The Company sold in auction substantially all of its
lab and office equipment in the second quarter of 1999. As a result of this
auction the Company recorded a loss in the amount of $157,000, which is a
component of general and administrative expense on the statement of operations.
There were no fixed asset disposals in 2000.

4. Accounts Payable and Accrued Expenses

      Accounts payable and accrued expenses consist of the following at December
31,

                                                             2001         2000
                                                             ----         ----
Accounts payable                                           $ 35,328     $ 53,981
Accrued legal costs                                         276,346      145,212
Accrued payroll, bonuses and vacation                        27,849       18,357
Accrued manufacturing and related items                     500,000      500,000
Accrued other expenses                                       88,012      265,581
                                                           ---------------------
   Total accounts payable and accrued expenses             $927,535     $983,131
                                                           =====================

5. Leases

      The Company leases office space under lease arrangements, which expire in
June 2002. The lease for the Company's office space includes payment terms that
are subject to increases due to taxes and other operating costs of the lessor.
Minimum lease payments under this lease for 2002 are approximately $20,000.

      Rent expense for the years ending on December 31, 2001, 2000 and 1999
amounted to $36,616, $45,526 and $309,601, respectively.

      Cash paid for interest on capital leases was $0, $0 and $44,685 in 2001,
2000 and 1999, respectively.

6. Income Taxes

      Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:

                                                       2001            2000
                                                       ----            ----
Deferred tax assets:
   Research and development credits                $  2,554,000    $  3,608,000
   Deferred compensation                                 79,000          79,000
   Intangible amortization                              857,000         208,000
   Net operating loss                                31,004,000      30,502,000
                                                   ----------------------------
Total deferred tax assets                            34,494,000      34,397,000
Valuation allowance for deferred tax assets         (34,494,000)    (34,397,000)
                                                   ----------------------------
Net deferred tax assets                                      --              --
                                                   ============================

    The change in the total valuation allowance was an increase of $97,000 for
the year ended December 31, 2001 and a decrease of $1,066,000 for the year
ended December 31, 2000.


                                       25
<PAGE>

      As of December 31, 2001, the Company had federal net operating losses
("NOL") and research and experimentation credit carryforwards of approximately
$77,510,000 and $2,554,000, respectively, which may be available to offset
future federal income tax liabilities and expire at various dates from 2006
through 2021. Approximately $29,000 of the gross deferred tax asset represents
the benefit of deductions from the exercise of stock options, which have been
fully reserved. The benefit from the $29,000 tax asset will be recorded as a
credit to additional paid-in capital when realized. As required by Statement of
Financial Accounting Standards No. 109, management of the Company has evaluated
the positive and negative evidence bearing upon the realizability of its
deferred tax assets, which are comprised principally of net operating loss and
research and experimentation credit carryforwards. Management has determined
that it is more likely than not that the Company will not realize the benefits
of federal and state deferred tax assets and, as a result, a valuation allowance
of $34,494,000 has been established at December 31, 2001.

      Ownership changes, as defined in the Internal Revenue Code, may have
limited the amount of net operating loss carryforwards that can be utilized
annually to offset future taxable income. Subsequent ownership changes could
further affect the limitation in future years.

7. Capital Stock

      On May 23, 2001, we entered into a common stock purchase agreement with
Court Square Capital Limited, our largest stockholder, to provide us with
additional capital for general corporate purposes, including the acquisition of
one or more new lines of business. Subject to certain conditions, including
stockholder approval, the agreement provides for us to issue and sell to Court
Square and its affiliates up to 3,750,000 shares of our common stock at a per
share price of $2.30, subject to adjustment. The agreement expires on May 23,
2003.

      See Note 8 for a description of Series D Preferred Stock.

      On October 15, 2001, the stockholders of the Company voted to approve the
merger of Ergo Science Corporation with and into its wholly-owned subsidiary,
ESC Merger Sub, Inc. On October 19, 2001, the merger became effective and ESC
Merger Sub. Inc. was renamed Ergo Science Corporation. Also at this time, each
share of the pre-merger Common Stock was converted into the right to receive .5
shares of the post-merger Common Stock, plus cash in lieu of any fractional
shares. The total paid by the Company for cash in lieu of fractional shares was
approximately $30. Shares of the post-merger Common Stock are subject to certain
transfer restrictions. These restrictions are intended to help preserve our
substantial tax net operating loss carryforwards for use in offsetting future
taxable income. In general, these restrictions will prohibit, without the prior
approval of the Board of Directors, the direct or indirect disposition or
acquisition of any of the Company's stock by or to any holder who owns or would
so own upon the acquisition (either directly or through the tax attribution
rules) 5% or more of the Company's stock.

8. License Agreements and Supplier Contracts

      On April 27, 1995 in conjunction with a redesigned plan for
commercialization of the Company's products, the Company effectively canceled
the previous existing partnership sublicenses by acquiring all the partners'
interests. The Company issued 278,875 shares of common stock and 5,618 shares of
Series D Exchangeable Preferred Stock (the "Series D Preferred Stock"), par
value $0.01 per share. The Company ascribed a value of $16 per share to the
common stock issued and $584 per share to the Series D Preferred Stock.

      The holders of Series D Preferred Stock are entitled to receive quarterly
dividends at a rate of 6% per annum compounded semiannually on the stated value.
Such dividends shall be cumulative, commencing on the date of original issue,
and shall only be payable to holders of record when and as declared by the Board
of Directors. The Company will have the option to convert the Series D Preferred
Stock into common stock during the 90 days after the Company receives FDA
approval to market its first product, if it receives that


                                       26
<PAGE>

approval. If the Company does not exercise its option to convert the Series D
Preferred Stock into common stock within the 90 days, the Series D Preferred
Stock will automatically be exchanged for subordinated debt securities at the
end of the 90 days. The terms of the Company's Series D Preferred Stock prohibit
the Company from paying dividends on the common stock. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of Series D Preferred Stock then outstanding will be entitled to receive an
amount of cash equal to the stated value of Series D Preferred Stock (including
any accrued by unpaid dividends) after any distribution is made on any senior
securities and before any distribution is made on any junior securities,
including Common Stock. The liquidation preference amount for the Series D
Preferred Stock as of December 31, 2001 was $10,238,660.

      On February 23, 1998, Ergo and Johnson & Johnson entered into a worldwide
Joint Collaboration and License Agreement (the "Joint Collaboration Agreement")
to develop and commercialize ERGOSET(R) tablets as well as other potential
collaboration products for the treatment of Type 2 diabetes and obesity. Under
the Joint Collaboration Agreement with Johnson & Johnson, the Company was
responsible for paying half of the development, marketing, and commercialization
costs, including launch costs, for ERGOSET(R) tablets as well as any other
collaboration compounds being developed and/or commercialized under the Joint
Collaboration Agreement. In January 1999, Johnson & Johnson terminated the Joint
Collaboration Agreement following the Company's receipt of a letter from the FDA
stating that its NDA for ERGOSET(R) tablets was not approvable.

      The Company is party to certain other license agreements, which require
the Company to pay royalties on product sales and to make specific payments on
the completion of certain milestones. No amounts have been accrued related to
these requirements as of December 31, 2001 or 2000.

9. Stock Options and Incentive Plan

      The Company has granted options to purchase shares of common stock to key
employees and directors. The options vest over periods of up to four years and
generally have a maximum term of ten years.

      Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") requires that companies either recognize
compensation expense for grants of stock, stock options, and other equity
instruments based on fair value, or provide pro forma disclosure of net income
or loss and earnings or loss per share in the notes to the financial statements.
The Company follows the disclosure provisions of SFAS 123 and applies APB
Opinion 25 and related interpretations in accounting for its plans. Accordingly,
no compensation cost has been recognized for its stock option plans. The effects
of applying SFAS 123 in this pro forma disclosure are not likely to be
representative of the effects on reported income or loss for future years. Had
compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates as calculated in
accordance with SFAS 123, the Company's net loss and loss per share for the
years ended December 31, 2001, 2000 and 1999 would have been increased to the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                   Years ended December 31,
                                            2001             2000             1999
                                            ----             ----             ----
<S>                                    <C>              <C>              <C>
Net income (loss):
      As reported                      $  (1,250,822)   $     336,455    $  (4,238,626)
      Pro forma                           (1,438,007)         268,527       (5,649,778)
Net income (loss) per share--basic
      As reported                      $       (0.18)   $        0.05    $       (0.59)

      Pro forma                                (0.20)            0.04            (0.79)
Net income (loss) per share--diluted
      As reported                      $       (0.18)   $        0.05    $       (0.59)

      Pro forma                                (0.20)            0.04            (0.79)
</TABLE>

      The fair value of each stock option is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:

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

      The weighted average fair value of the options granted during 2001 was
$1.72. No stock options were granted in 2000 or 1999.

      During 1996 and 1997, the Company granted to various employees and
directors' options to purchase 238,923 shares, which were granted with exercise
prices below market value on the date of grant. In connection with the issuance
of these options, the Company recorded deferred compensation which was fully
amortized as of December 31, 1999.

      In 1997, the Company also granted to each of its six medical advisors an
option to purchase 2,500 shares of common stock at an exercise price of $25.26
per share. These options were granted in connection with the medical advisors'
renegotiated consulting agreements. The option shares were issued at the market
price on the date of grant and vest over a four-year period. The Company
recognized $0, $0 and $55,800 in stock compensation expense related to these
options in 2001, 2000 and 1999, respectively.

      During 2001, the Company granted to Directors options to purchase 50,000
shares of common stock at exercise prices ranging from $1.25 to $1.56, Also
during 2001, the Company granted 27,500 options to purchase common stock to the
Chief Executive Officer of the Company at an exercise price of $2.05. All
options issued in 2001 were issued at prices equal to the market price on the
grant dates.

      Information related to stock option activity for the period from December
31, 1998 through December 31, 2001 is as follows:

                                                     Weighted
                                                     Average
                                        Shares     Option Price
                                        ------     ------------

Outstanding at December 31, 1998        838,314      $    16.82
   Exercised                             (7,500)           1.60
   Canceled                            (390,701)          19.14
                                      ---------

Outstanding at December 31, 1999        440,113           15.02
   Exercised                            (14,875)           1.60
   Canceled                            (288,363)          14.90
                                      ---------

Outstanding at December 31, 2000        136,875           16.72
   Granted                               77,500            1.72
   Exercised                                 --              --
   Canceled                                  --              --
                                      ---------

Outstanding at December 31, 2001        214,375      $    11.30
                                      =========

      The following table summarizes information about stock options outstanding
at December 31, 2001:

<TABLE>
<CAPTION>
                            Options Outstanding                                              Options Exercisable
--------------------------------------------------------------------------------------------------------------------------
                                        Weighted-Average
    Range of             Number            Remaining          Weighted-Average            Number          Weighted-Average
Exercise Prices        Outstanding      Contractual Life       Exercise Price          Exercisable         Exercise Price
---------------        -----------      ----------------       --------------          -----------         --------------
<S>                    <C>              <C>                    <C>                     <C>                 <C>
$   0.00 to   1.60         91,500          5.8 years              $   1.56                  41,500            $    1.60
$   2.05 to   6.50         45,500          8.6 years              $   3.80                  14,750            $    6.46
$  13.42 to 27.625         41,625          4.6 years              $  20.42                  41,625            $   20.42
$  34.00 to  42.26         35,750          5.8 years              $  35.16                  32,000            $   35.29
                       ----------                                                      -----------
$   0.00 to  42.26        214,375                                 $  11.30                 129,875            $   16.48
                       ==========                                                      ===========
</TABLE>

Effective as of November 1, 1994, the Board of Directors adopted the Ergo
Science Development Corporation Long-Term Incentive Plan (the "Incentive
Plan") pursuant to which certain officers, directors, and key employees may
be granted awards with respect to shares of the Company's common stock. The
awards that could be granted under the Incentive Plan included incentive
stock options, nonstatutory options, stock appreciation rights (SARs) and
restricted stock awards. Awards of options to purchase 35,000 shares at an
exercise price of $1.562 per share, were granted under the Incentive Plan in
2001. No awards were made in 1999 or 2000. These amounts are included in the
tables above. At the time that the stockholders approved the 2001 Stock Plan,
the Incentive Plan was closed and no new grants will be made under this Plan.

On May 15, 1996, the Board of Directors approved, subject to stockholder
approval, a proposal to adopt a Stock Option Plan for Non-Employee Directors of
the Company (the "Director Stock Plan"). The Director Stock Plan provided for an
initial grant of an option to purchase 5,000 shares of common stock to each
eligible non-employee director upon first being elected or appointed to serve on
the Board of Directors. Those eligible directors already serving at the time the
Director Stock Plan was approved by the stockholders of the Company were each
granted a stock option to purchase 5,000 shares of common stock with a deemed
date of grant of May 15, 1996. Each director that remained eligible to receive
stock options under the Director Stock Plan on the second anniversary of the
date that such director was first granted a stock option under the Director
Stock Plan was granted a second stock option to purchase 5,000 shares of common
stock. Stock options granted under the Director Stock Plan vest and become
exercisable in equal increments on the first and second anniversary of their
date of grant, but no stock option may be exercised more than ten years after
the date of its grant. The Director Stock Plan was approved by the stockholders
at the Company's 1996 Annual Meeting of Stockholders that took place on June 25,
1996. Awards of options to purchase 15,000 shares at exercise prices of
$1.25-$1.562 per share were granted under the Director


                                       27
<PAGE>

Stock Plan in 2001. There were no awards granted in 2000 or 1999. These amounts
are included in the tables above. At the time that the stockholders approved the
2001 Stock Plan, the Company's Director Stock Plan was closed and no new grants
will be made under this Plan.

      On October 15, 2001, the stockholders of the Company approved the Ergo
Science Corporation 2001 Employee, Director and Consultant Stock Plan (the "2001
Stock Plan") pursuant to which certain officers, directors, and key employees
may be granted awards with respect to shares of the Company's common stock. The
awards that may be granted under the 2001 Stock Plan include incentive stock
options under section 422 of the Internal Revenue Code, non-qualified stock
options, stock appreciation rights (SARs) and restricted stock awards. A total
of 1,600,000 shares of our common stock were reserved for issuance pursuant to
options and other awards granted under this plan. This plan provides for an
initial grant of an option to purchase 5,000 shares of common stock to each
eligible non-employee director upon first being elected or appointed to serve on
the Board of Directors. Stock options granted to directors under the 2001 Stock
Plan vest and become exercisable in equal increments on the first five
anniversaries of their date of grant, but no stock option may be exercised more
than ten years after the date of its grant. Awards of options to purchase 27,500
shares at an exercise price of $2.05 per share were granted under the 2001 Stock
Plan in 2001. There were no awards granted in 2000 or 1999. As of December 31,
2001, 1,572,500 shares were available to be granted under the 2001 Stock Plan.

      At the time that the stockholders approved the 2001 Stock Plan, the
Company's Long-Term Incentive Stock and Director Stock Plan were closed and no
new grants will be made under either the Long-Term Incentive Plan or the
Director Plan.

10. LSU Settlement

      The Company has a Royalty Agreement with LSU under which the Company is
required to pay LSU a royalty based upon gross sales in the United States and a
percentage revenues the Company receives outside of the United States.

      On May 1, 1995, Ergo Research Corporation, a wholly owned subsidiary of
the Company, entered into a Novated License and Royalty Agreement with LSU that
replaces the Royalty Agreement with LSU described in the prior paragraph. The
agreement requires the Company to pay LSU $350,000 for the first and $500,000
for all subsequent administrative approvals of licensed pharmaceutical products.
The Company must pay LSU a royalty based upon gross sales in the United States
with minimum royalties due.

      In 1998, a dispute arose between the Company and LSU concerning whether
the Company owed LSU royalties because of certain payments the Company received
from Johnson & Johnson. LSU sought payment of $4,138,000. Following mediation
required under the LSU Agreement, the dispute was submitted to binding
arbitration. In February 2000, the Company announced that the arbitrator
rendered a preliminary decision that, contrary to the Company's position,
royalties are due to LSU because of a $10 million payment received from Johnson
& Johnson for the purchase of common stock. Following the arbitrator's
preliminary decision against the Company, the Company settled its dispute with
LSU in October 2000. As part of the settlement, the Company paid LSU
approximately $3 million, of which $1 million had been accrued as of December
31, 1999. Additionally, during the year ended December 31, 2000, the Company
adjusted its estimates of amounts required to settle other ERGOSET(R) related
obligations. These adjustments were recorded as reductions of research and
development expenses in 2000, resulting in a negative research and development
expense of $163,834.

11. Employee Benefit Plans

      Effective February 1, 1997, the Company implemented a defined contribution
plan under Section 401(k) of the Internal Revenue Code (the "401k Plan"). Under
the 401k Plan, eligible employees are permitted to contribute, subject to
certain limitations, up to 20% of their gross salary. The Company makes a
matching contribution, which currently totals 50% of the employee's
contribution, up to


                                       28
<PAGE>

a maximum amount equal to the lesser of $2,500 or 6% of the employee's gross
salary. The employer matching contribution vests over a four year period, 25%
for each year of service. Years of service prior to the implementation of the
401k Plan are excluded from the vesting period. In 2001, 2000 and 1999, the
Company's contributions to the 401k Plan amounted to $2,230, $2,475 and $25,275,
respectively. The Company terminated the 401k Plan effective December 31, 2001.

12. Quarterly Results (Unaudited)

      The following table sets forth unaudited selected financial information
for the periods indicated. This information has been derived from unaudited
consolidated financial statements, which, in the opinion of management, include
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of such information. The results of operations for any
quarter are not necessarily indicative of the results to be expected for any
future period.

<TABLE>
<CAPTION>

                                                    First Quarter      Second Quarter    Third Quarter     Fourth Quarter
                                                    -------------      --------------    -------------     --------------
<S>                                                 <C>                 <C>              <C>                <C>
2001
Net loss                                             $(115,694)          $(393,140)       $(418,429)         $(323,559)
Loss per share
   Basic and diluted-as previously reported          $   (0.04)          $   (0.08)       $   (0.08)         $      --
   Basic and diluted-revised                         $   (0.02)          $   (0.06)       $   (0.06)         $   (0.05)

2000
Net income (loss)                                    $  52,533           $ 151,786        $ 367,359          $(235,223)
Earnings (loss) per share
   Basic and diluted-as previously reported          $   (0.01)          $    0.00        $    0.03          $   (0.05)
   Basic and diluted-revised                         $    0.01           $    0.02        $    0.05          $   (0.03)
</TABLE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES.

      None.


                                       29
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The following sets forth the ages, principal occupation and present
position of each of the Directors and the executive officer of the Company.

      DAVID R. BURT, Age 38, Class III Director, joined us as Vice President,
Corporate Development, in March 1993. He was appointed our Secretary in March
1997. In March 1999, Mr. Burt joined our Board of Directors. He was appointed
our President and Chief Executive Officer in March 1999. He was elected Chairman
of our Board if Directors in March 2001. Mr. Burt also serves as the President
and Chief Executive Officer and a Director of NAHC, Inc., formerly NovaCare,
Inc., a company traditionally in the healthcare industry. From 1990 until 1993,
Mr. Burt practiced corporate and securities law at Johnson & Gibbs, P.C., a law
firm in Dallas, Texas. Mr. Burt's practice involved representing issuers and
underwriters in financing transactions in a variety of high technology
industries. Mr. Burt received a B.A. in government from Dartmouth College and a
J.D. from the University of Maryland Law School. Before attending law school,
Mr. Burt worked on the staff of United States Senator Paul S. Sarbanes.

      WILLIAM T. COMFORT, III, Age 35, Class I Director, joined our Board of
Directors in January 2001. Mr. Comfort has been a private equity investor with
CVC Capital Partners, a leading private equity firm based in London. Recently,
Mr. Comfort left CVC Capital Partners to open his own private equity firm. Mr.
Comfort has served on the boards of numerous companies. Mr. Comfort received his
J.D. and L.L.M. in tax from New York University School of Law.

      CHARLES E. FINELLI, Age 38, Class I Director, joined our Board of
Directors in March 2001. Mr. Finelli has been in the private practice of law for
six years specializing in litigation. He is a graduate of the University of
Arkansas School of Law. He is a Director of NAHC, Inc.

      J. WARREN HUFF, Age 48, Class II Director, joined our Board of Directors
in February 2001. Mr. Huff is Chairman of the Board of Directors of Openpages,
Inc., a company in the software content production industry. From 1998-2001, Mr.
Huff was CEO of Openpages, Inc. From 1997 to 1998, Mr. Huff was President and
Chief Executive Officer of InLight, Inc., a privately held medical education
software company that he founded. From 1992 until 1997, Mr. Huff was our
President and CEO. Mr. Huff earned his Juris Doctor from the Southern Methodist
University School of Law and graduated magna cum laude with a B.A. in business
administration from University of Texas at Austin.

      THOMAS F. MCWILLIAMS, Age 59, Class II Director, joined our Board of
Directors during September 1992 in connection with the purchase of our
convertible securities by Citicorp Venture Capital Ltd. ("CVC"). Mr. McWilliams
is Managing Director of CVC, where he has been employed since 1983. He is a
director of Chase Brass and Copper Company, Inc., a company engaged in the
manufacture of brass rods and bars, MMI Products, Inc., a company engaged in the
manufacture and distribution of products used in the commercial, infrastructure
and residential construction industries, Hydrochem Industrial Services, Inc., a
company engaged in providing industrial cleaning services, and a number of other
privately owned companies. Mr. McWilliams received his A.B. from Brown
University and his M.B.A. from the Wharton School, University of Pennsylvania.

      Our executive officers hold office at the pleasure of the Board of
Directors. The Board of Directors is divided into three classes. Directors in
each class are elected for three-year terms, with the terms of the three classes
staggered so that directors from a single class are elected at each annual
meeting of stockholders. David R. Burt is a Class III director whose term of
office expires at the annual meeting of stockholders to be held in 2004. William
T. Comfort, III and Charles E. Finelli are Class I directors whose terms of
office expire at the annual meeting of stockholders to be held in 2002. J.
Warren Huff and Thomas F. McWilliams are Class II directors whose terms of
office expire at the annual meeting of stockholders to be held in 2003.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 requires that our
executive officers, directors, and persons who beneficially own more than 10% of
a registered class of our equity securities file with the Securities and
Exchange Commission initial reports of ownership and reports of any changes in
ownership of our common stock and our other equity securities. Based on our
review of forms furnished to us


                                       30
<PAGE>

and written representations from reporting persons, we believe that all filing
requirements applicable to our executive officers, directors, and 10% beneficial
owners were complied with during 2001 except that an initial report of ownership
was filed late by Mr. Comfort.

ITEM 11. EXECUTIVE COMPENSATION

      The following table summarizes all compensation awarded to, earned by, or
paid to David R. Burt, our Chief Executive Officer throughout 2001, for services
rendered in all capacities during the years ended December 31, 2001, 2000 and
1999 (the "Named Executive Officer").

<TABLE>
<CAPTION>
                                                                                         Long-Term Compensation
                                                                                         ----------------------
                                                                                      Awards              Payouts
                                                                                      ------              -------
                                                                                             Securities
                                                                  Other      Restricted      Underlying
                                                       Bonus      Annual        Stock         Options/       LTIP       All Other
   Name and Principal Position    Year     Salary       (1)    Compensation    Awards          SARs(#)     Payouts   Compensation(2)
   ---------------------------    ----     ------       ---    ------------    ------          -------     -------   ---------------
<S>                               <C>     <C>         <C>      <C>             <C>             <C>         <C>          <C>
David R. Burt, Chairman of the
Board,                            2001    $150,000    $    --  $     --          --             27,500      $   --       $1,500
President, Chief                  2000     170,000         --        --          --                 --          --        1,708
Executive Officer and Secretary   1999     200,000     40,000        --          --                 --          --        2,000
</TABLE>

(1)   1999 bonuses were expensed in 1999 and paid in 2000.

(2)   All other compensation consists of matching contributions made under the
      Company's 401(k) plan.


                                       31
<PAGE>

                            OPTION GRANTS IN 2001

    During 2001, we granted to Directors options to purchase 100,000 shares of
common stock at exercise prices ranging from $.625 to $.781, prior to the effect
of the reverse stock split approved by our stockholders on October 15, 2001. The
effect of the reverse stock spit resulted in a reduction of the options to
50,000 shares at prices ranging from $1.25 to $1.562. Also during 2001, we
granted options to purchase 27,500 shares of common stock to our CEO at an
exercise price of $2.05. All options issued in 2001 were issued at prices equal
to the market price on the grant dates.

      The following table shows grants of stock options that we made during 2001
to the Named Executive Officer.

<TABLE>
<CAPTION>
                                                Individual Grants
                     --------------------------------------------------------------------------
                        Number of             % of Total
                       Securities            Options/SARs           Exercise
                       Underlying             Granted to            or Base
                      Options/SARs           Employees in            Price           Expiration
   Name              Granted (#) (1)         Fiscal Year           ($/Share)            Date
   ----              ---------------         -----------           ---------            ----
<S>                  <C>                     <C>                   <C>            <C>
David R.Burt              27,500                 100%                $2.05        October 25, 2011
</TABLE>

(1)   The options were granted pursuant to our 2001 Employee, Director and
      Consultant Stock Plan. The options granted to the above Named Executive
      Officer are non-qualified stock options and vest annually in four equal
      installments commencing on March 1, 2002.

OPTION EXERCISES AND YEAR-END OPTION VALUES

    The following table provides information about the number of shares issued
upon option exercises by the Named Executive Officer during 2001, and the value
realized by the Named Executive Officer. The table also provides information
about the number and value of options held by the Named Executive Officer at
December 31, 2001.

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                           Number of Securities
                                                                Underlying                Value of the Unexercised
                                                           Unexercised Options              In-The-Money Options
                                                            At Fiscal Year-End             at Fiscal Year-End (2)
                                                            ------------------             ----------------------
                             Shares
                            Acquired
                               on          Value
          Name              Exercise   Realized (1)    Exercisable    Unexercisable     Exercisable     Unexercisable
          ----              --------   ------------    -----------    -------------     -----------     -------------
<S>                         <C>        <C>             <C>            <C>               <C>             <C>
David R. Burt........             --     $       --         70,875          34,375           $1,720               --
</TABLE>

(1)   Amounts shown in this column do not necessarily represent actual value
      realized from the sale of the shares acquired upon exercise of the option
      because in many cases the shares are not sold on exercise but continued to
      be held by the executive officer exercising the option. The amounts shown
      represent the difference between the option exercise price and the market
      price on the date of exercise, which is the amount that would have been
      realized if the shares had been sold immediately upon exercise.

(2)   The value of unexercised in-the-money options at fiscal year end assumes a
      fair market value for the Company's Common Stock of $2.03, the closing
      sale price per share of the Company's Common Stock as reported in the OTC
      Bulletin Board on Monday, December 31, 2001.

                          COMPENSATION OF DIRECTORS

    In general, our policy is to pay no compensation to members of the Board of
Directors for attending meetings of the Board of Directors and its committees.
However, we do reimburse directors for the expenses incurred in attending
meetings of the Board of Directors and its committees. In June 1996, our
shareholders approved a Stock Option Plan for Non-Employee Directors, which we
refer to as the Director Stock Plan. The Director Stock Plan provided for an
initial grant of a non-qualified stock option for 5,000 shares of common stock
to each non-employee director upon first being elected or appointed to serve on
the Board of Directors. Mr. McWilliams who was serving as a non-employee
director when the Director Stock Plan was approved, received an initial grant of
a stock option for 5,000 shares of common stock with a deemed grant date of May
15, 1996. In addition, on May 15, 1997 Mr. McWilliams was granted a second
non-qualified stock option for 5,000 shares of Common Stock. Messrs. Comfort,
Finelli and Huff each


                                       32
<PAGE>

received an initial grant of a stock option for 5,000 shares of common stock
upon first being elected or appointed to serve on the Board of Directors during
2001. Each option under the Director Stock Plan has an exercise price equal to
the fair market value of the common stock on the grant date. These options will
become exercisable in equal increments on the first and second anniversary of
their date of grant and will expire ten years after the grant date if not
exercised. If a change in control occurs, all stock options granted under the
Director Stock Plan will become fully exercisable. The Director Stock Plan was
terminated in 2001, however that termination had no effect on options already
outstanding.

      In October 2001, our shareholders approved our 2001 Employee, Director and
Consultant Stock Plan, which we refer to as the 2001 Plan. The 2001 Plan
provides for an initial grant of a non-qualified stock option for 22,500 shares
of common stock to each future non-employee director upon first being elected or
appointed to serve on the Board of Directors. Each such option will have an
exercise price equal to the fair market value of the common stock on the grant
date. These options will become exercisable in equal increments on the first
five anniversaries of their date of grant and will expire ten years after the
grant date if not exercised.

      In March 2001, Messrs. Comfort and Huff each received an additional
non-qualified stock option for 17,500 shares of common stock under our 1995
Long-term Incentive Plan. Each of these options has an exercise price equal to
the fair market value of the common stock on the grant date. These options will
become exercisable in equal increments on each of the first five anniversaries
of their date of grant if the grantee participates in 75% or more of the
meetings of the Board of Directors held during the year ending on that
anniversary and will expire ten years after the grant date if not exercised. If
a change in control occurs, these stock options will become fully exercisable.
In April 2001, we made a one-time cash payment of $15,000 to Mr. Finelli in
consideration of his service on the Board of Directors.

EMPLOYMENT CONTRACTS

      The Named Executive Officer is an employee-at-will as the Company did not
renew the employment agreement with its Named Executive Officer in October 1998.
The current base salary amount is $150,000 to Mr. Burt. The Compensation
Committee may increase the base amounts at its discretion.

DIRECTOR AND OFFICER INDEMNIFICATION

      We have entered into indemnification agreements with each of our directors
and executive officer, agreeing to indemnify the director or officer to the
fullest extent permitted by law, and to advance expenses, if the director or
officer becomes a party to or witness or other participant in any threatened,
pending or completed action, suit or proceeding by reason of any occurrence
related to the fact that the person is or was a director, officer, employee,
agent or fiduciary of ours or a subsidiary of ours or another entity at our
request, unless a reviewing party, either outside counsel or a committee
appointed by the board of directors, determines that the person would not be
entitled to indemnification under applicable law. In addition, if a
change-in-control or a potential change-in-control occurs, and if the person
indemnified so requests, we will establish a trust for the benefit of the
indemnitee and fund the trust in an amount sufficient to satisfy all expenses
reasonably anticipated at the time of the request to be incurred in connection
with any claim relating to such an event. The reviewing party will determine the
amount deposited in the trust. An indemnitee's rights under the indemnification
agreement are not exclusive of any other rights under the restated certificate
of incorporation or bylaws, as amended, or applicable law.

           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      The members of the Compensation Committee are Thomas F. McWilliams, J.
Warren Huff and William T. Comfort III. None of these members is or has been an
employee of Ergo Science, other than Mr. Huff, who was an officer as recently as
1996. None of our executive officers serve as a member of the


                                       33
<PAGE>

Board of Directors or compensation committee of any entity that has one or more
executive officers serving as a member of our Board of Directors or Compensation
Committee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth certain information regarding the beneficial
ownership of the shares of the our common stock as of March 8, 2002, by (i) each
person we know to be the beneficial owner of 5% or more of the outstanding
shares of our common stock, (ii) the Named Executive Officer, (iii) each of our
directors, and (iv) all of our executive officers and directors as a group.
Except as indicated in the footnotes to the table, we believe that the persons
named in the table have sole voting and investment power with respect to the
shares of common stock indicated.

<TABLE>
<CAPTION>
                                                                                    Shares
                                                                                 Beneficially
                                                                                   Owned (1)
Name and Address**                                                             Number   Percent
------------------                                                             ------   -------
<S>                                                                           <C>         <C>
Court Square Capital Limited (2)                                              1,639,955   22.9%
399 Park Avenue
New York, New York 10043
David R. Burt (3)                                                                70,925       *
Thomas F. McWilliams (4)                                                      1,649,955   23.0%
William T. Comfort III (5)                                                      363,267    4.9%
Charles E. Finelli (6)                                                            2,500       *
J. Warren Huff    (7)                                                             6,000       *
All directors and the current executive officer as a group (5 persons)(8)     2,092,647   29.2%
</TABLE>

-----------

*     Represents beneficial ownership of less than 1% of the Company's
      outstanding shares of Common Stock.

**    Addresses are given for beneficial owners of more than 5% of our
      outstanding common stock only.

(1)   The number of shares of common stock issued and outstanding on March 8,
      2002, was 7,149,578. The calculation of percentage ownership for each
      listed beneficial owner is based upon the number of shares of our common
      stock issued and outstanding at March 8, 2002, plus shares of our common
      stock subject to options held by such person at March 8, 2002, and
      exercisable within 60 days thereafter. The persons and entities named in
      the table have sole voting and investment power with respect to all shares
      shown as beneficially owned by them, except as noted below.

(2)   This information, except the percentage beneficially owned, is based
      solely on a Schedule 13D filed on September 11, 2000 with the Securities
      and Exchange Commission by Citigroup, Inc. ("Citigroup"). Consists of
      1,639,955 shares held by Court Square Capital Limited ("Court Square").
      Court Square, Citicorp Banking Corporation ("Citicorp Banking"), Citicorp
      ("Citicorp"), Citigroup Holdings Company ("Citigroup Holding") and
      Citigroup, Inc. ("Citigroup") may be deemed to share the voting and
      dispositive power of the 1,639,955 shares of our common stock directly
      beneficially owned by Court Square by virtue of, Citicorp Banking's 100%
      ownership interest in Court Square, Citicorp's 100% ownership interest in
      Citicorp Banking, Citigroup Holdings'100% ownership interest in Citicorp
      and Citigroup's 100% interest in Citigroup Holdings. Citigroup may also be
      deemed to share the voting and dispositive power of the 3,000 shares of
      our common stock directly beneficially owned by certain subsidiaries of
      Citigroup. Does not include 3,750,000 shares of common stock which may be
      issued pursuant to a common stock purchase agreement between us and Court
      Square.


                                       34
<PAGE>

(3)   Includes 70,875 shares of common stock subject to stock options held by
      Mr. Burt on March 8, 2002 and exercisable within 60 days thereafter, and
      50 shares of our common stock owned by Mr. Burt's daughter.

(4)   Includes 10,000 shares of common stock subject to stock options held by
      Mr. McWilliams on March 8, 2002 and exercisable within 60 days thereafter.
      Excludes shares owned by Court Square, as to which Mr. McWilliams
      disclaims beneficial ownership.

(5)   Includes 2,500 shares of Common Stock subject to exercisable stock
      options. Excludes shares owned by Court Square, as to which Mr. Comfort
      disclaims beneficial ownership.

(6)   Shares of common stock subject to stock options held by Mr. Finelli on
      March 8, 2002 and exercisable within 60 days thereafter.

(7)   Shares of common stock subject to stock options held by Mr. Huff on March
      8, 2002 and exercisable within 60 days thereafter.

(8)   Includes 130,875 shares of common stock subject to stock options held by
      the directors and executive officer on March 8, 2002, and exercisable
      within 60 days thereafter. See note 4 for further details concerning
      shares as to which Mr. McWilliams disclaims beneficial ownership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      We have entered into a common stock purchase agreement with Court Square
Capital Limited. Mr. Williams, one of our directors is also a Managing Director
of Court Square. Subject to a number of conditions, including the consummation
of a qualifying acquisition, we may issue, and Court Square and its affiliates
may purchase, up to 3,750,000 shares of its common stock, at a per share price
of $2.30, subject to adjustment.


                                       35
<PAGE>

                                     PART IV

    ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)      -- The financial statements filed as part of this Report at Item 8
            are listed in the Index to Consolidated Financial Statements on page
            25 of this Report.
(a)(2)      -- None.
(a)(3)      -- The following documents are filed or incorporated by reference as
            exhibits to this Report:

Exhibit
Number      Document Description
------      --------------------

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 David R. Burt, Thomas F. McWilliams, William T. Comfort III, J.
            Warren Huff and Charles E. Finelli. 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.


                                       36
<PAGE>

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    -- Amended and Restated Supply Agreement dated October 31, 1997, by
            and among Ergo Science Corporation, Ergo Research Corporation and
            Geneva Pharmaceuticals, Inc. Filed as exhibit 10.1 to the
            Registrant's Quarterly Report on Form 10-Q filed with the Commission
            on November 14, 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.]
10.11    -- 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.
21.1     -- Subsidiaries of registrant.
23.1     -- Consent of PricewaterhouseCoopers LLP
(b)      -- Reports filed on Form 8-K.
            - On October 19, 2001 stating that the Registrant merged with and
            into its wholly owned subsidiary, ESC Merger Sub, Inc., a Delaware
            corporation ("New Ergo"), with New Ergo being the surviving
            corporation and changing its name to "Ergo Science Corporation".


                                       37
<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of North
Andover and Commonwealth of Massachusetts on March 29, 2002.

                                    ERGO SCIENCE CORPORATION

                                    By:             /s/ DAVID R. BURT
                                          -------------------------------------
                                                      David R. Burt
                                          President and Chief Executive Officer

    Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

     /s/ DAVID R. BURT       President, Chief Executive Officer   March 29, 2002
---------------------------  and Director
      (David R. Burt)        (Principal Executive and Financial
                             Officer

 /s/ THOMAS F. MCWILLIAMS    Director                             March 29, 2002
---------------------------
  (Thomas F. McWilliams)

/s/ WILLIAM T. COMFORT, III  Director                             March 29, 2002
---------------------------
 (William T. Comfort, III)

    /s/ J. WARREN HUFF       Director                             March 29, 2002
---------------------------
     (J. Warren Huff)

  /s/ CHARLES E. FINELLI     Director                             March 29, 2002
---------------------------
   (Charles E. Finelli)


                                      38
<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number                Document Description
------                --------------------

 21.1 --  Subsidiaries of registrant.



                                       39