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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No:000-22679
WORLD OF SCIENCE, INC.
(Exact name of Registrant as specified in this charter)
NEW YORK 16-0963838
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
900 Jefferson Road, Building 4, Rochester, New York 14623
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (716)475-0100
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
Common stock outstanding as of August 31, 1997: 5,077,955 shares of common
stock.
<PAGE>
WORLD OF SCIENCE, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Statements of Operations...........................3
Condensed Balance Sheets.....................................4
Condensed Statements of Cash Flows...........................5
Notes to Condensed Financial Statements......................6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................7-10
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Change in Securities and Use of Proceeds.....................11
ITEM 3. Defaults Upon Senior Securities - None
ITEM 4. Submission of Matters to a Vote of Security Holders - None
ITEM 5. Other Information - None
ITEM 6. Exhibits and Reports on Form 8-K.............................12
SIGNATURE....................................................13
2
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WORLD OF SCIENCE, INC.
CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------------------------------------------------
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
1997 1996 1997 1996
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 8,287 $ 6,369 $ 15,573 $ 11,931
COST OF SALES AND OCCUPANCY EXPENSES 6,507 4,811 12,237 9,110
------------- ------------- ------------- -------------
GROSS PROFIT 1,780 1,558 3,336 2,821
SELLING, GENERAL & ADMINISTRATIVE 3,149 2,383 6,149 4,597
------------- ------------- ------------- -------------
OPERATING LOSS (1,369) (825) (2,813) (1,776)
INTEREST EXPENSE, NET (97) (99) (122) (122)
------------- ------------- ------------- -------------
LOSS BEFORE INCOME TAXES (1,466) (924) (2,935) (1,898)
INCOME TAX BENEFIT (602) (379) (1,204) (778)
------------- ------------- ------------- -------------
NET LOSS $ (864) $ (545) $ (1,731) $ (1,120)
============= ============= ============= =============
NET LOSS PER SHARE $ (0.22) $ (0.16) $ (0.47) $ (0.33)
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 3,880 3,423 3,652 3,423
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
WORLD OF SCIENCE, INC.
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AUGUST 2, FEBRUARY 1, AUGUST 3,
1997 1997 1996
--------------- --------------- ---------------
CURRENT ASSETS:
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 1,741 $ 2,014 $ 60
ACCOUNTS RECEIVABLE 289 55 222
INVENTORIES 11,180 6,927 8,579
PREPAID EXPENSES AND OTHER
CURRENTS ASSETS 708 386 586
TAXES RECEIVABLE 1,215 778
DEFERRED INCOME TAXES 368 368 335
------------------ ------------------ -------------------
TOTAL CURRENT ASSETS 15,501 9,750 10,560
PROPERTY, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET 5,707 4,984 4,951
DEFERRED INCOME TAXES 540 540 281
------------------ ------------------ -------------------
TOTAL ASSETS $ 21,748 $ 15,274 $ 15,792
================== ================== ===================
CURRENT LIABILITIES:
LINE OF CREDIT $ $ $ 3,830
CURRENT PORTION OF LONG
TERM DEBT 72 69 324
CURRENT PORTION OF CAPITAL
LEASE OBLIGATIONS 104 102 156
ACCOUNTS PAYABLE 3,074 1,569 2,034
ACCRUED EXPENSES 455 728 345
INCOME TAXES PAYABLE 1,464
------------------ ------------------ -------------------
TOTAL CURRENT LIABILITIES 3,705 3,932 6,689
LONG TERM DEBT 26 69 611
CAPITAL LEASE OBLIGATIONS 78 130 253
ACCRUED OCCUPANCY EXPENSE 719 663 615
------------------ ------------------ -------------------
TOTAL LIABILITIES 4,528 4,794 8,168
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $.01 PAR VALUE
AUTHORIZED 5,000,000 SHARES;
NO SHARES ISSUED AND OUTSTANDING
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED 10,000,000 SHARES;
ISSUED AND OUTSTANDING 5,022,955, 50 34 34
3,422,955 AND 3,422,955 SHARES
ADDITIONAL PAID-IN CAPITAL 11,158 2,703 2,703
RETAINED EARNINGS 6,012 7,743 4,887
------------------ ------------------ -------------------
TOTAL STOCKHOLDERS' EQUITY 17,220 10,480 7,624
------------------ ------------------ -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,748 $ 15,274 $ 15,792
================== ================== ===================
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
WORLD OF SCIENCE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------------------------------------------------
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
1997 1996 1997 1996
---------- --------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
NET LOSS $ (864) $ (545) $ (1,731) $ (1,120)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 321 261 617 496
CHANGE IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN:
ACCOUNTS RECEIVABLE (61) 46 (234) (156)
INVENTORIES (1,870) (1,288) (4,253) (2,608)
PREPAID EXPENSES AND OTHER
CURRENTS ASSETS (72) (204) (322) (337)
TAXES RECEIVABLE (613) (379) (1,215) (778)
(DECREASE) INCREASE IN:
ACCOUNTS PAYABLE 812 559 1,505 877
ACCRUED EXPENSES (124) (14) (273) (622)
INCOME TAXES PAYABLE (89) (81) (1,464) (994)
ACCRUED OCCUPANCY EXPENSE 29 (13) 56 60
------------- ------------- ------------- -------------
NET CASH USED IN OPERATING ACTIVITIES: (2,531) (1,658) (7,314) (5,182)
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES--
CAPITAL EXPENDITURES, NET (884) (501) (1,340) (875)
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
NET PROCEEDS FROM ISSUANCE OF COMMON STOCK 8,471 8,471
PROCEEDS FROM ADVANCES ON LINE OF CREDIT 3,335 1,830 6,000 3,830
PROCEEDS FROM ISSUANCE OF LONG-TERM DEBT 175 400 845 770
PRINCIPAL PAYMENTS ON LINE OF CREDIT (6,000) (6,000)
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (863) (16) (885) (36)
PRINCIPAL PAYMENTS ON CAPITAL LEASES (25) (44) (50) (67)
------------- ------------- ------------- -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 5,093 2,170 8,381 4,497
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,678 11 (273) (1,560)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 63 49 2,014 1,620
============= ============= ============= =============
END OF PERIOD $ 1,741 $ 60 $ 1,741 $ 60
============= ============= ============= =============
CASH PAID DURING PERIOD FOR:
INTEREST $ 97 $ 99 $ 129 $ 124
INCOME TAXES $ 89 $ 81 $ 1,464 $ 1,007
============= ============= ============= =============
NONCASH INVESTING AND FINANCING ACTIVITY:
ACQUISITION OF EQUIPMENT UNDER A CAPITAL LEASE $ $ $ $ 240
============= ============= ============= =============
</TABLE>
See accompanying notes to condensed financial statements
5
<PAGE>
WORLD OF SCIENCE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements and are subject to year-end adjustments.
However, in the opinion of management, all known adjustments (which consist
primarily of normal recurring accruals) have been made to present fairly the
financial position and operating results for the unaudited periods. This
financial information should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Prospectus as most
recently filed with the Securities and Exchange Commission on August 26, 1997
pursuant to Rule 424(b).
Due to the seasonal nature of the Company's business, results for the second
quarter and first six months of fiscal 1997 are not necessarily indicative of
the results to be expected for the full fiscal year ending January 31, 1998.
NOTE 2. - Impact of New Accounting Standards
The Company is required to adopt Statement of Financial Accounting Standards No.
128, Earnings Per Share (SFAS 128), in 1997. SFAS 128 requires presentation of
basic and diluted net earnings (loss) per share amounts on the face of the
statement of operations. The Company does not expect such adoption to have a
significant impact on its financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130). SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity of
a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. SFAS 130, which is effective for the
Company in 1998, will not have a material impact on its financial statements.
NOTE 3. - Future Results
This report contains forward looking statements regarding, among other matters,
the Company's future strategy, store opening plans, merchandising strategy and
growth. The forward looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Act of 1995. Forward looking
statements address matters which are subject to a number of risks and
uncertainties. In addition to the general risks associated with the operation of
specialty retail stores in a highly competitive environment, the success of the
Company will depend on a variety of factors, such as consumer spending which is
dependent on economic conditions affecting disposable consumer income such as
employment, business conditions, interest rates, and taxation. The Company's
continued growth also depends upon the demand for its products, which in turn is
dependent upon various factors, such as the introduction and acceptance of new
products and the continued popularity of existing products, as well as the
timely supply of all merchandise. Reference is made to the Company's filings
with the Securities and Exchange Commission for further discussion of risks and
uncertainties regarding the Company's business.
6
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
General
The Company operated 52 permanent stores and 74 seasonal stores as of August 2,
1997, as compared to 40 permanent stores and 46 seasonal stores as of August 3,
1996. Four new permanent stores and 9 new seasonal stores were opened in the
second quarter of fiscal 1997 as compared to 1 new permanent store and 8 new
seasonal stores in the second quarter of fiscal 1996.
On July 11, 1997, the Company completed an initial public offering of 2,450,000
shares of common stock at $6.00 per share. Of the 2,450,000 shares of commons
stock offered, 1,600,00 shares were sold by the Company and 850,000 shares were
sold by selling stockholders. The net proceeds to the Company, after deducting
offering expenses, amounted to $8.5 million. Subsequent to August 2, 1997, the
Company's Underwriters exercised an option to purchase 100,000 additional shares
of common stock at $6.00 per share. Of the additional 100,000 shares of common
stock sold, 40,000 shares were sold by the Company and 60,000 shares were sold
by selling stockholders. The net proceeds to the Company amounted to
approximately $218,000.
Comparison of Three Months Ended August 2, 1997 to Three Months Ended August 3,
1996.
Net Sales. Net sales increased to $8.3 million from $6.4 million, or 30.1%. Of
the $1.9 million increase in net sales: $907,000 was attributable to four new
permanent stores opened during the second quarter of fiscal 1997 and eleven new
permanent stores not in operation as of the beginning of the prior year; $1,000
was attributable to increased comparable permanent store net sales; and $1.0
million was attributable to net sales derived from an increased number of
seasonal stores operated during the second quarter of fiscal 1997. Comparable
store net sales for the Company's permanent stores were unchanged for the
thirteen-week period ended August 2, 1997.
Cost of Sales and Occupancy Expenses. Cost of sales and occupancy expenses
increased to $6.5 million from $4.8 million, an increase of 35.3%. As a
percentage of net sales, it increased to 78.5% from 75.5%. The dollar increase
was due to increased store occupancy expenses from more stores in operation in
the second quarter of fiscal 1997, costs associated with a move to a new
distribution facility, and increased cost of sales due to higher net sales. The
increase as a percentage of net sales of 3.0% was attributable to a 0.7%
increase in distribution center costs, primarily as a result of the relocation
of the distribution center, and a 2.5% increase in occupancy expenses caused by
unchanged comparable store net sales and a decrease in average seasonal per
store sales. These increases were partially offset by a 0.2% increase in margins
for products sold.
Selling, General, and Administrative Expenses. Selling, general, and
7
<PAGE>
administrative expenses increased to $3.1 million from $2.4 million, an increase
of 32.1%. Selling, general, and administrative expenses increased to support
higher net sales levels and an increased number of permanent and seasonal
stores. As a percentage of net sales, it increased to 38.0% from 37.4%,
primarily as a result of higher payroll, insurance, and travel expenses.
Interest Expense, Net. Net interest expense decreased to $97,000 in the second
quarter of fiscal 1997 from $99,000 in the second quarter of fiscal 1996,
primarily as a result of proceeds from the initial public offering being used to
pay down seasonal borrowings.
Net Loss. Net loss increased to $864,000, or 10.4% of sales, in the second
quarter of fiscal 1997 from $545,000, or 8.6%, in the second quarter of fiscal
1996.
Comparison of Six Months Ended August 2, 1997 to Six Months Ended August 3,
1996.
Net Sales. Net sales increased to $15.6 million from $11.9 million, or 30.5%.
The first six months of fiscal 1997 represented a twenty-six week period, as
compared to a twenty-seven week period in fiscal 1996. Of the $3.7 million
increase in net sales: $1.7 million was attributable to eight new permanent
stores opened during the first six months of fiscal 1997 and seven new permanent
stores not in operation the full six months of the prior year; $3,000 was
attributable to increased comparable store net sales; and $2.0 million was
attributable to net sales derived from an increased number of seasonal stores
operated during the first six months of fiscal 1997. Comparable store net sales
for the Company's permanent stores increased 2.3% for the twenty-six week period
ended August 2, 1997.
Cost of Sales and Occupancy Expenses. Cost of sales and occupancy expenses
increased to $12.2 million from $9.1 million, an increase of 34.3%. As a
percentage of net sales, it increased to 78.6% from 76.4%. The dollar increase
was due to increased store occupancy expenses from more stores in operation in
the first six months of fiscal 1997, costs associated with a move to a new
distribution facility, and increased cost of sales due to higher net sales. The
increase as a percentage of net sales of 2.2% was attributable to a 0.4%
increase in distribution center costs, primarily as a result of the relocation
of the distribution center, and a 1.8% increase in occupancy expenses caused by
a decrease in average seasonal per store sales, and the comparison of a
twenty-six week period in the first six months of fiscal 1997 to a twenty-seven
week period in the first six months of fiscal 1996. Margins for products sold
were unchanged.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased to $6.1 million from $4.6 million, an increase
of 33.8%. Selling, general, and administrative expenses increased to support
higher net sales levels and an increased number of permanent and seasonal
stores. As a percentage of net sales, it increased to 39.5% from 38.5%,
primarily as a result of higher payroll, insurance, and travel expenses, and a
severance payment of $65,000 to the former President of the Company.
Interest Expense, Net. Net interest expense was unchanged in the first six
months of fiscal 1997 from the first six months of fiscal 1996. Proceeds from
the initial public offering were used to pay down seasonal borrowings, which had
increased as a result of increased new permanent store construction borrowings
and financing inventory for an increased number of permanent and seasonal
stores.
Net Loss. Net loss increased to $1.7 million or 11.1% of sales, in the first six
months of fiscal 1997 from $1.1 million or 9.4%, in the first six months of
fiscal 1996.
8
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Seasonality
The Company's business is subject to substantial seasonal variations in demand.
Historically, a significant portion of the Company's sales and all of its net
income have been realized during the months of November and December, and levels
of sales and net income have generally been substantially lower from January
through October, resulting in losses in the first three fiscal quarters. In
preparation for its holiday selling season, the Company significantly increases
inventories and related indebtedness, hires an increased number of temporary
employees in its stores and distribution center, and incurs costs in setting up
seasonal store locations. If, for any reason, the Company's sales were to be
substantially below seasonal norms during the months of November and December,
or if the Company could not hire a sufficient number of qualified employees
during the peak periods, the Company's business, financial condition and results
of operations would be adversely affected. Quarterly results are also affected
by the timing of new store openings and the amount of revenue contributed by
permanent and seasonal stores.
Liquidity and Capital Resources
The primary sources of the Company's cash for working capital and capital
expenditures have been net cash flows from operating activities, capital lease
financing and bank borrowings. Seasonal working capital needs have been met
through short-term borrowings under a revolving line of credit.
During the second quarter of fiscal 1997, the Company completed an initial
public offering which provided net proceeds of $8.5 million. The Company used
approximately $6.8 million to pay down the balance on its existing credit
facilities which were used in the first six months of fiscal 1997 to finance
inventory and new store construction.
The Company's primary capital requirements and working capital needs are related
to capital expenditures for new stores, purchase and upgrade of management
information systems and the purchase of inventory to meet seasonal needs,
particularly inventory for the holiday selling season. Cash flow utilized by
operations increased $2.5 million in the second quarter of fiscal 1997 from $1.7
million in the second quarter of fiscal 1996 due to a greater second quarter net
loss, increased levels of inventories and other working capital items. Cash flow
utilized by operations increased to $7.3 million in the first six months of
fiscal 1997 from $5.2 million in the first six months of fiscal 1996 due to a
greater net loss, increased levels of inventories and other working capital
items in the first six months of fiscal 1997.
The Company has a revolving line of credit for inventory financing, secured by
the Company's inventory. Under this line, the Company may borrow up to the
lesser of $12.5 million or 80.0% of the Company's cost of inventory. The line
expires on February 29, 1998, and bears interest at the bank's prime rate. The
credit agreement for this line of credit prohibits the payment of cash dividends
or the purchase or redemption of the Company's capital stock in excess of
$50,000 in the aggregate in any fiscal year. The Company also has a revolving
term credit facility in the amount of $1.5 million for the purpose of new store
construction which bears interest at a rate of .25% over the bank's prime rate.
This facility is available for new store locations identified by the Company by
July of 1998, and borrowings under this line mature in July of 2000. As of
August 2, 1997, there were no amounts outstanding under either of these
9
<PAGE>
lines of credit. The Company also has an available line of credit for up to $1.0
million for multiple term loans to be used for leasehold improvements and
equipment. Under this line, the Company has a term loan with a principal balance
of $98,000 at August 2, 1997. The loan is payable in monthly installments over a
term of five years with interest payable at 7.4%, matures on November 1, 1998,
and is secured by the Company's equipment. The loan agreement for this loan
prohibits the payment of cash dividends. As of August 2, 1997, outstanding
capital lease obligations and total debt amounted to $280,000, of which $182,000
represented capital lease obligations. The capital lease obligations have terms
expiring in fiscal 1999.
Capital expenditures in the first six months of fiscal 1997, net of landlord
build-out allowances, amounted to $1.3 million as compared to $875,000 in the
first six months of fiscal 1996. The increase resulted from the opening of 5
additional permanent store locations in the first six months of fiscal 1997 and
investments for the relocation and expansion of the Company's distribution
center.
In addition to the 8 permanent stores opened in the first six months of fiscal
1997, the Company plans to open 4 additional permanent stores in fiscal 1997, of
which 2 are presently under construction, and 2 are scheduled to begin
construction in late September.
Management believes that cash on hand, operating cash flow, and borrowings under
the Company's existing credit facilities will be sufficient to finance the
Company's operations for the next twelve months.
10
<PAGE>
Part II. OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
On July 8, 1997, the Company commenced an initial public offering ("IPO") of
2,450,000 shares of common stock, par value $.01 per share (the "Common Stock")
of the Company pursuant to the Company's final prospectus dated July 8, 1997
(the "Prospectus"). The Prospectus was contained in the Company's Registration
Statement on Form S-1, which was declared effective by the Securities and
Exchange Commission (SEC File No. 333-25031) on July 8, 1997. Of the 2,450,000
shares of Common Stock offered, 1,600,00 shares were offered and sold by the
Company and 850,000 shares were offered and sold by certain stockholders of the
Company. As part of the IPO, the Company and certain stockholders of the Company
granted the several underwriters, for whom A.G. Edwards & Sons, Inc., and
Raymond James & Associates, Inc., acted as representatives (the
"Representatives"), an over-allotment option to purchase up to an additional
367,500 shares of Common Stock (the "Underwriters' Option"). The IPO terminated
on July 11, 1997, upon the sale of 2,450,000 shares of Common Stock to the
Underwriters. On August 26, 1997, the Representatives, on behalf of the several
underwriters, exercised a portion of the Underwriters' Option, purchasing 40,000
shares of Common Stock from the Company and 60,000 shares of Common Stock from
certain stockholders of the Company.
The aggregate offering price of the IPO to the public was $14.7 million
(exclusive of the Underwriters' Option), with proceeds to the Company and
selling stockholders, after deduction of the underwriting discount, of $8.9
million (before deducting offering expenses payable by the Company) and $4.7
million, respectively. The aggregate offering price of the portion of the
Underwriters' Option exercised was $600,000, with proceeds to the Company and
selling stockholders, after deduction of the underwriting discount, of $223,200
(before deducting expenses) and $334,800, respectively.
From July 8, 1997 through August 2, 1997, the aggregate amount of expenses
incurred by the Company in connection with the issuance and distribution of the
shares of Common Stock offered and sold in the IPO were approximately $460,000,
including expenses paid for accounting, legal, printing, and other expenses. The
aggregate amount of expenses incurred by the Company in connection with the
issuance and distribution of the shares of Common Stock issued upon the exercise
of the Underwriters' Option were $5,200, including expenses paid for accounting,
legal, and other expenses.
None of the expenses paid by the Company in connection with the IPO or the
exercise of the Underwriters' Option were paid, directly or indirectly, to
directors, officers, or controlling stockholders (e.g., persons owning 10% or
more of the Company's stock) of the Company.
Net proceeds to the Company from the IPO, after deducting underwriting discounts
and commissions and expenses (approximately $1.1 million) were approximately
$8.5 million. Net proceeds to the Company as a result of the exercise of the
Underwriters' Option, after deducting underwriting discounts and commissions and
expenses (approximately $22,000) were approximately $218,000.
The net proceeds to the Company from the IPO, approximately $8.5 million, have
been applied as follows: approximately $6.8 million was used to pay down the
balance of the Company's credit facilities which were used during the first six
months of fiscal 1997 to finance inventory and new store construction;
approximately an estimated $1.4 million was used to finance additional inventory
and an estimated $320,000 was used for new store construction since August 2,
1997.
The net proceeds to the Company from the exercise of the Underwriters' Option,
approximately $218,000, were applied as follows: approximately $218,000 was used
to finance inventory build-up in preparation for the holiday selling season. All
of the expenditures occurred after August 2, 1997.
The Company has used all of the net proceeds to the Company from the IPO
including net proceeds to the Company from the exercise of the Underwriters'
Option.
11
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit 11.1 Computation of Per Share Net Loss
Exhibit 27 Financial Data Schedule
B. REPORTS ON FORM 8-K
No reports on Form 8-K were filed with the Securities and Exchange Commission
during the second quarter of fiscal 1997.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 12, 1997
WORLD OF SCIENCE, INC.
(Registrant)
/s/Charles A. Callahan
Charles A. Callahan
Vice President of Finance
Chief Financial Officer and Assistant Secretary
(Signed on behalf of the registrant and as Principal
Accounting and Financial Officer)
13
<PAGE>
EXHIBIT 11.1
WORLD OF SCIENCE, INC.
COMPUTATION OF PER SHARE NET LOSS
(In thousands, except per share data)
Quarter Ended
August 2, 1997 August 3, 1996
Net loss $(864) $(545)
Weighted average common shares
outstanding 3,880 3,423
Per share net loss $(0.22) $(0.16)
There is no material difference in the number of shares used in computing per
share amounts as calculated for primary and fully diluted earnings per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> AUG-02-1997
<CASH> 1741
<SECURITIES> 0
<RECEIVABLES> 289
<ALLOWANCES> 0
<INVENTORY> 11180
<CURRENT-ASSETS> 15501
<PP&E> 9851
<DEPRECIATION> 4144
<TOTAL-ASSETS> 21748
<CURRENT-LIABILITIES> 3705
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 17170
<TOTAL-LIABILITY-AND-EQUITY> 21748
<SALES> 15573
<TOTAL-REVENUES> 15573
<CGS> 12237
<TOTAL-COSTS> 12237
<OTHER-EXPENSES> 6149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129
<INCOME-PRETAX> (2935)
<INCOME-TAX> (1204)
<INCOME-CONTINUING> (1731)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1731)
<EPS-PRIMARY> (0.47)
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</TABLE>
