WORLD OF SCIENCE INC, POS AM, 1997-07-08

WORLD OF SCIENCE INC
POS AM, 1997-07-08
MISC GENERAL MERCHANDISE STORES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1997
REGISTRATION NO. 333-25031
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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POST-EFFECTIVE

AMENDMENT NO. 1
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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WORLD OF SCIENCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

NEW YORK 5999 16-0963838
(STATE OR OTHER (PRIMARY STANDARD (IRS EMPLOYER ID NO.)
JURISDICTION OF INDUSTRIAL CLASSIFICATION
INCORPORATION OR CODE NO.)
ORGANIZATION)

900 JEFFERSON ROAD
BUILDING FOUR
ROCHESTER, NEW YORK 14623
(716) 475-0100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

FRED H. KLAUCKE, PRESIDENT
900 JEFFERSON ROAD
BUILDING FOUR
ROCHESTER, NEW YORK 14623
(716) 475-0100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

----------------

WITH COPIES TO:
THOMAS E. WILLETT, ESQ. KEITH F. HIGGINS, ESQ.
HARRIS BEACH & WILCOX, LLP ROPES & GRAY
130 EAST MAIN STREET ONE INTERNATIONAL PLACE
ROCHESTER, NEW YORK 14604 BOSTON, MASSACHUSETTS 02110
(716) 232-4440 (617) 951-7000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

2,450,00 SHARES

LOGO
COMMON STOCK

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Of the 2,450,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering"), 1,600,000 shares are being
sold by World of Science, Inc. (the "Company" or "World of Science") and
850,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Principal and Selling Stockholders." The Company
will not receive any of the proceeds from the sale of the shares by the
Selling Stockholders.

Prior to the Offering, there has been no public market for the Company's
Common Stock. For a discussion of the factors considered in determining the
initial public offering price see "Underwriting." The Common Stock has been
approved for listing on the Nasdaq National Market under the symbol "WOSI."

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SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share.................. $6.00 $.42 $5.58 $5.58
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Total(3)................... $14,700,000 $1,029,000 $8,928,000 $4,743,000
</TABLE>
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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting offering expenses payable by the Company, estimated at
$400,000.

(3) The Company and a Selling Stockholder have granted the Underwriters a 45-
day option to purchase up to an additional 367,500 shares of Common Stock
solely to cover over-allotments, if any. If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions,
Proceeds to Company and Proceeds to Selling Stockholders will be
$16,905,000, $1,183,350, $10,755,450, and $4,966,200, respectively. See
"Underwriting."

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The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them and subject to
certain conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer or to reject any orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made on or about July 11,
1997.

A.G. EDWARDS & SONS, INC. RAYMOND JAMES & ASSOCIATES, INC.

The date of this Prospectus is July 8, 1997.

<PAGE>

[INSIDE FRONT COVER PAGE OF PROSPECTUS]

[INSIDE OF GATEFOLD--PHOTOGRAPHS OF EXTERIORS OF PERMANENT AND SEASONAL STORES
AND PHOTOGRAPHS OF STORE PRODUCT AREAS]

[OUTSIDE OF GATEFOLD--MAP DESIGNATING LOCATIONS OF PERMANENT AND SEASONAL
STORES]

The Company intends to furnish its stockholders with annual reports
containing audited financial statements, and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.

This discussion contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate," "believe," "estimate," "expect" and similar expressions as they
relate to the Company or its management are intended to identify such forward-
looking statements. The Company's actual results, performance or achievements
could differ materially from those expressed in, or implied by, these forward-
looking statements as a result of, among other things, the factors set forth
in the section entitled "Risk Factors."

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THIS
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

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* World of Science(R) is a registered trademark of the Company.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, all information in this Prospectus assumes that the
Underwriters' over-allotment option has not been exercised. All share and per
share data have been retroactively adjusted to give effect to a five-for-one
stock split effective April 18, 1997. As used in this Prospectus, unless
otherwise indicated, the terms "fiscal" and "fiscal year" refer to the calendar
year in which the Company's fiscal year commences. For example, "fiscal 1996"
refers to the fiscal year ended February 1, 1997. The Company's fiscal year was
the 52-week period ending on the Sunday closest to January 31 for fiscal years
prior to fiscal 1996, and was the 53-week period ending on the Saturday closest
to January 31 for fiscal 1996.

THE COMPANY

World of Science is a leading specialty retailer of a variety of traditional
and distinctive science and nature products. The Company's merchandising
strategy emphasizes both the educational and entertainment values of its
products, which are offered at competitive prices in a stimulating retail
environment. World of Science has developed a broad customer base, as its
products appeal to customers of all ages for gift-giving, educational use and
entertainment. The Company operates both a permanent and seasonal store format.
At May 31, 1997, the Company operated 49 permanent stores and 65 seasonal
stores in 29 states, primarily in enclosed malls.

Permanent World of Science stores are open year-round under long-term leases,
contain an average of 2,000 square feet of selling space and maintain
approximately 2,600 stock keeping units ("SKUs") of inventory. Permanent stores
are also generally characterized by an upscale store facade and interior
fixture package. Seasonal stores are open during the holiday selling season, or
for an extended period beyond that season, under leases with shorter terms.
Seasonal stores contain an average of 1,500 square feet of selling space,
maintain approximately 1,950 SKUs of inventory, occupy available in-line mall
space, require minimal store build-out and utilize reusable fixtures.

Over the past five years, the Company's net sales have increased from $11.8
million in fiscal 1992 to $44.6 million in fiscal 1996, and net income has
increased from approximately $827,000 to $1.7 million during the same period.
Total stores operated during the holiday selling season increased from 31 in
fiscal 1992 to 129 in fiscal 1996.

BUSINESS STRATEGY

. DISTINCTIVE AND TRADITIONAL MERCHANDISE. World of Science stores offer a
variety of educationally and entertainment-oriented, distinctive science and
nature products, together with a broad assortment of more traditional science
and nature products. Many of the products offered in World of Science stores
are not widely available from other retailers within the malls occupied by
the Company's stores. The Company continually seeks new and distinctive
products and, accordingly, updates approximately one-third of its SKUs
annually.

. EDUCATIONAL AND ENTERTAINING SHOPPING EXPERIENCE. The Company's products are
displayed to encourage customers to browse, experiment with, and examine the
features and quality of the products as the store layout guides them through
up to 25 different product areas. This educational and entertaining shopping
experience places the customer in an environment where experimentation and
play are integral components of the buying experience.

. SUPERIOR CUSTOMER SERVICE. The Company employs enthusiastic and friendly
sales personnel who are trained to highlight the benefits of the products
offered and encourage customers to browse at their leisure.

3
<PAGE>

the required capital investment. The Company opportunistically seeks out
available in-line space in quality shopping malls which it can lease for
several months around the holiday selling season and, in some instances, for
an extended period thereafter. The cost of opening seasonal stores is
substantially lower and the lead time is substantially shorter than those
associated with permanent stores. In fiscal 1996, 46.1% of the Company's total
net sales were generated by seasonal stores.

. PRICE INTEGRITY. The Company's pricing strategy is to offer quality products
at fair prices. World of Science stores sell merchandise generally ranging in
price from less than $1.00 to $1,000. The Company does not engage in frequent
storewide sales or price mark-downs and believes it uses sales and price
mark-downs to a lesser degree than other retailers. The Company believes that
its pricing strategy fosters customer trust and confidence.

EXPANSION STRATEGY

The Company has grown by opening new permanent stores, by operating seasonal
stores to capture sales during the holiday selling season, and by increasing
sales volume from its existing permanent stores. Although management does not
believe there are geographical constraints on the location of future stores,
the Company's expansion strategy will focus primarily on opening stores in new
and existing markets in the eastern half of the United States before expanding
elsewhere. The Company believes that this strategy will allow it to increase
the recognition of the "World of Science" name, enhance operating efficiencies
and manage growth. The principal elements of the Company's expansion strategy
are as follows:

. NEW PERMANENT STORE OPENINGS. The Company currently operates 49 permanent
World of Science stores. The Company expects to open a total of approximately
12 permanent stores in fiscal 1997, of which five had been opened as of May
31, 1997, and approximately 18 permanent stores in fiscal 1998 in both new
and existing markets. In many cases, permanent stores will replace seasonal
stores and, in appropriate circumstances, the Company may acquire or assume
pre-existing leases of other retail stores.

. ACTIVE SEASONAL STORE PROGRAM. The Company operated 85 World of Science
seasonal stores during the fiscal 1996 holiday selling season and currently
operates 65 seasonal stores. During the past three fiscal years, the Company
has only opened one permanent store in a pre-existing mall which was not
preceded by a seasonal store in the same mall. The Company plans to operate
approximately 100 seasonal stores during the holiday selling season in fiscal
1997 and approximately 120 seasonal stores in fiscal 1998.

The Company was incorporated in New York in 1969. The Company's executive
offices are located at 900 Jefferson Road, Building Four, Rochester, New York
14623 and its telephone number is (716) 475-0100.

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by:
The Company............................... 1,600,000 shares
The Selling Stockholders.................. 850,000 shares
Total................................. 2,450,000 shares
Common Stock outstanding after the Offering.. 5,022,955 shares(1)
Use of proceeds.............................. To finance new store expansion,
reduce indebtedness and for
working capital and other
general corporate purposes. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol....... WOSI
</TABLE>
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(1) Based on the number of shares of Common Stock outstanding at May 31, 1997.
Does not include 565,000 shares of Common Stock reserved for issuance under
the Company's stock option plans, of which options for 165,000 shares have
been granted. See "Management--Stock Option Plans."

4
<PAGE>

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
--------------------------------------------------------------- ----------------------
JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1993 1994 1995 1996 1997(1) 1996(1) 1997
----------- ----------- ----------- ----------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND STORE OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $ 11,794 $ 23,153 $ 31,335 $ 37,265 $ 44,563 $ 5,562 $ 7,287
Cost of sales and
occupancy expenses.... 7,365 14,861 20,788 23,957 28,630 4,299 5,730
----------- ----------- ----------- ----------- ----------- ---------- ----------
Gross profit........... 4,429 8,292 10,547 13,308 15,933 1,263 1,557
Selling, general and
administrative
expenses.............. 2,978 6,785 9,048 10,680 12,593 2,214 3,001
----------- ----------- ----------- ----------- ----------- ---------- ----------
Operating income
(loss)................ 1,451 1,507 1,499 2,628 3,340 (951) (1,444)
Interest expense, net.. 44 68 320 418 394 23 25
----------- ----------- ----------- ----------- ----------- ---------- ----------
Income (loss) before
income taxes.......... 1,407 1,439 1,179 2,210 2,946 (974) (1,469)
Income tax expense
(benefit)............. 580 600 460 906 1,210 (399) (602)
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net income (loss)...... $ 827 $ 839 $ 719 $ 1,304 $ 1,736 $ (575) $ (867)
=========== =========== =========== =========== =========== ========== ==========
Net income (loss) per
share(2).............. $ .32 $ .23 $ .20 $ .35 $ .49 $ (.16) $ (.25)
=========== =========== =========== =========== =========== ========== ==========
Weighted average number
of shares............. 2,590 3,625 3,666 3,738 3,522 3,530 3,519
STORE OPERATING DATA:
Selected Permanent
Store Data
Number of stores at
beginning of period... 17 23 27 33 37 37 44
Number of stores at end
of period............. 23 27 33 37 44 39 48
Total net sales........ $10,217,000 $12,720,000 $16,178,000 $20,241,000 $23,998,000 $3,479,000 $4,259,000
Percentage increase in
comparable store
net sales(3)(4)....... 4.2% 1.7% 2.9% 3.1% 3.5% 10.4% 4.9%
Total square footage at
end of period(5)...... 40,074 50,843 65,048 75,182 94,348 79,706 104,686
Average net sales per
square foot(3)(5)..... $ 307 $ 280 $ 274 $ 272 $ 275 $ 43 $ 42
Average net sales per
store(3)(5)........... $ 434,000 $ 495,000 $ 532,000 $ 544,000 $ 575,000 $ 89,000 $ 91,000
Selected Seasonal Store
Data
Number of stores at
beginning of period... 0 0 26 40 37 37 62
Peak number of stores
during period(6)...... 8 79 89 71 85 38 65
Total net sales........ $ 1,325,000 $10,323,000 $15,113,000 $17,019,000 $20,565,000 $2,083,000 $3,028,000
</TABLE>

<TABLE>
<CAPTION>
MAY 3, 1997
----------------------
ACTUAL AS ADJUSTED(7)
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(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 63 $ 5,256
Working capital......................................... 5,326 13,296
Total assets............................................ 16,892 22,085
Total debt, including capital lease obligations......... 3,657 322
Stockholders' equity.................................... 9,613 18,141
</TABLE>
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(1) The fiscal year ended February 1, 1997 consisted of 53 weeks as compared
with 52 weeks in all prior years presented. The three months ended May 4,
1996 reflects a fourteen-week period as compared with the thirteen-week
period ended May 3, 1997.
(2) Computed based on the weighted average number of shares of common stock and
common stock equivalents, calculated using the treasury stock method. For
fiscal 1992 through fiscal 1995, the weighted average number of shares
includes 654,550 shares owned by the Company's Chairman which were subject
to an option granted by him to the Company's former President, which option
terminated unexercised on January 17, 1996. The 654,550 shares were
considered both as issued and outstanding and as common stock equivalents
issued by the Company for those fiscal years.
(3) Percentage increase in comparable store net sales, average net sales per
square foot and average net sales per store are adjusted to reflect a 52-
week year for all years presented and a thirteen-week fiscal quarter.
(4) A comparable store is defined as a permanent store which was open as a
permanent store for at least one full fiscal year as of the beginning of
the fiscal year.
(5) Average net sales per square foot and average net sales per store include
only stores open for the entire fiscal period. Total square footage at end
of period reflects the gross leased space of permanent stores open at the
end of the period.
(6) Reflects the greatest number of seasonal stores open at any one time during
the period, which is historically during the fourth quarter of a fiscal
year.

(7) Adjusted to give effect to the Offering and the application of the net
proceeds therefrom. See "Use of Proceeds."

5
<PAGE>

RISK FACTORS

In addition to other information in this Prospectus, the following factors
should be carefully considered in evaluating the Company and its business
before purchasing the shares of Common Stock offered by this Prospectus.

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 holiday selling season, which
consists of the months of November and December, and sales and net income have
generally been significantly lower from January through October, resulting in
losses in the first three fiscal quarters. The operation of a substantial
number of seasonal stores during the holiday selling season increases the
seasonal nature of the Company's sales. Net sales in the fourth fiscal quarter
represented 58.7% and 57.7% of the Company's total net sales for fiscal 1995
and 1996, respectively. Sales generated during the holiday selling season will
continue to have a significant impact on the Company's results of operations.
If for any reason the Company's sales during any holiday selling season are
below expectations, or if there is a decrease in the availability of working
capital needed in the months prior to any holiday selling season, the
Company's profitability would be materially and adversely affected. The
Company must make decisions regarding the type and amount of inventory to buy
well in advance of the season in which it will be sold, especially for the
holiday selling season. Significant deviations from projected demand for
products, inclement weather, or generally unfavorable economic conditions
could have an adverse effect on the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Seasonality and Quarterly
Fluctuations."

FLUCTUATIONS IN QUARTERLY RESULTS

The Company's revenues and earnings may fluctuate from quarter to quarter
based upon a variety of factors, including the amount and timing of sales
contributed by new stores, the integration of new stores into the operations
of the Company, the success of its seasonal store program, costs associated
with opening new stores and other associated expenses. As a result of the
Company's expansion plans to open new stores in fiscal 1997, operating losses
for the first fiscal quarter were, and for the second and third fiscal
quarters are likely to be, greater than those in fiscal 1996. If the Company's
operating results in future quarters are below the expectations of securities
analysts and investors, the market price of the Company's Common Stock could
be adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Seasonality and Quarterly Results."

INABILITY TO IMPLEMENT EXPANSION STRATEGY

Substantially all of the Company's growth in revenues over the past five
years is attributable to revenues from the opening of additional stores. The
Company's future growth depends to a significant extent on the opening of new
permanent and seasonal stores, and to a lesser extent, on the Company's
ability to increase sales in its existing stores. At May 31, 1997, the Company
had 49 permanent stores and 65 seasonal stores in operation, primarily in the
eastern half of the United States. The Company currently plans to open a total
of approximately 12 new permanent stores during fiscal 1997 and to operate a
peak number of approximately 100 seasonal stores in fiscal 1997, and to open
approximately 18 new permanent stores during fiscal 1998 and to operate a peak
number of approximately 120 seasonal stores in fiscal 1998, primarily in new
and existing markets in the eastern half of the United States. The Company's
ability to open and operate new stores profitably is dependent on, among other
factors, the availability of suitable sites on acceptable lease terms, the
availability of

6
<PAGE>

qualified store personnel, the Company's ability to obtain adequate product
inventory, the Company's financial resources and the Company's ability to
manage the operational aspects of growth. There can be no assurance that the
Company will be able to open and operate new stores on a timely and profitable
basis, that opening new stores in markets already served by the Company will
not adversely affect existing store profitability or reduce comparable store
net sales, or that comparable store net sales will increase in the future. In
addition, there can be no assurance that start-up costs for new stores will
not increase as a result of inflation, local economic conditions or other
factors. Moreover, the retail leasing environment may tighten, hindering the
Company's expansion plans. Any of these factors may have a material adverse
effect upon the Company's future performance and ability to meet its
projections. In addition, with respect to the Company's seasonal stores, there
can be no assurance that the store premises will remain available due to the
Company's reliance on short-term leases. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Business--Expansion Strategy."

INABILITY TO MANAGE GROWTH

The Company's ability to manage growth will depend, in part, on its ability
to recruit, hire, and train additional personnel, including key middle
management personnel and store sales personnel. Although the Company intends
to recruit or promote additional personnel as needed, there can be no
assurance that the Company will be successful in hiring or training sufficient
qualified individuals. Managing additional growth will require continued
development of the Company's financial and management controls, including
inventory management and accounting systems. A failure to successfully manage
sales growth could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION

Competition for consumer spending is highly intense among specialty
retailers, traditional department stores and mass merchants in regional
shopping malls and other high traffic retail locations. The Company competes
against other retailers for suitable real estate locations and qualified
personnel. The specialty retail business has few barriers to entry. In
addition, as the Company expands into new markets, its success may depend in
part on its ability to gain market share from established competitors. Many of
the Company's competitors have substantially greater financial, marketing and
other resources than the Company. There can therefore be no assurance that the
Company will be able to compete successfully with them in the future. See
"Business--Competition."

ECONOMIC CONDITIONS

The Company's operating results may be adversely affected by general
economic conditions that impact consumers' disposable income, including
employment, business conditions, interest rates and tax policies. In addition,
because the Company's stores are located predominantly in the eastern half of
the United States, the Company is more sensitive to changes in the economy and
consumer attitudes in that geographic area than more geographically diverse
retailers. A deterioration in national or regional economic conditions could
have a material adverse effect on the Company's business, financial condition
and results of operations.

CHANGING CONSUMER PREFERENCES

The Company's success depends in part upon its ability to anticipate and
respond to changing consumer preferences in a timely manner. Although the
Company attempts to stay abreast of lifestyle and consumer preference trends,
any failure by the Company to identify and respond to such trends could
adversely affect the Company's business, results of operations and financial
condition. The Company's success also depends upon the volume of sales and
traffic within the shopping malls it occupies, and the closing of anchor
stores in such malls could have a material adverse affect on the Company's
business, financial condition and results of operations.

7
<PAGE>

DISTINCTIVE PRODUCTS

The Company's success depends to a large degree on its ability to introduce
in a timely manner new or updated products which are affordable, distinctive,
and not widely available from other retailers. The Company updates
approximately one-third of its SKUs every year. Although the Company believes
that there are a number of sources for many of its products, it relies on a
smaller number of sources for its distinctive products. Any event causing a
disruption of supplies from such sources, including insolvency of a
significant source or the imposition of additional import restrictions, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE ON KEY EMPLOYEES

The Company's success depends, to a significant extent, upon the continued
services of a number of key employees. The loss of key employees, particularly
Fred Klaucke, President, Chief Executive Officer, and founder of the Company,
would have a material adverse effect on the Company's business, financial
condition and results of operations. The Company believes that its future
success also will depend upon its ability to attract and retain additional
highly skilled management personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. See "Management."

CONTROL BY OFFICERS AND DIRECTORS

Immediately after the Offering, the Company's officers and directors will
beneficially own 36.2% of the outstanding shares of Common Stock. Accordingly,
the Company's officers and directors, if they vote in the same manner, will
have the effective ability to elect all of the Company's directors and
determine the outcome of practically all matters submitted to a vote of the
Company's stockholders. Moreover, they will have the ability to preclude the
approval of any matter requiring more than a majority vote of the
stockholders. This concentration of ownership may have the effect of delaying,
deterring or preventing a change of control of the Company, including
transactions in which the holders of Common Stock might receive a premium for
their shares over prevailing market prices. See "Principal and Selling
Stockholders" and "Description of Capital Stock."

POTENTIAL EFFECTS OF ANTI-TAKEOVER PROVISIONS.

The Company's Restated Certificate of Incorporation provides for authorized
but unissued shares of preferred stock (the "Preferred Stock"). The Company's
Board of Directors has the authority, without action by the Company's
stockholders, to fix the rights and preferences of and to issue shares of the
Preferred Stock, which may have the effect of delaying, deterring, or
preventing a change in control of the Company. The Company has also imposed
various procedural and other requirements that could make it more difficult
for stockholders to effect certain corporate actions. In addition, the
classification of the Board of Directors of the Company could have the effect
of delaying, deterring, or preventing a change in control of the Company,
including transactions in which the holders of Common Stock might receive a
premium for their shares over prevailing market prices. See "Management" and
"Description of Capital Stock."

NO PRIOR MARKET FOR COMMON STOCK; POSSIBILITY OF VOLATILITY OF COMMON STOCK
PRICE

Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price for the shares of Common Stock was
determined through negotiations among the Company and the representatives of
the Underwriters, and may not be indicative of the market price of the Common
Stock after the Offering. See "Underwriting." There can be no assurance that
an active trading market will develop or be sustained or that investors in the
Common Stock will be able to resell their shares at or above the initial
public offering price. In addition, the trading price of the Common Stock
could be subject to wide fluctuations in response to variations in the
Company's quarterly operating results, changes in earnings estimates by
analysts, conditions in the Company's business, announcements by the Company,
its product sources or competitors, or general market or economic conditions.
In addition, in recent years the stock market has experienced extreme price
and volume fluctuations. Such market fluctuations could have a material
adverse effect on the market price for the Common Stock.

8
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Sales of Common Stock after the Offering, or the availability of additional
shares of Common Stock for future sale in the public market could adversely
affect the market price of the Common Stock prevailing from time to time. Upon
completion of the Offering, the Company will have outstanding 5,022,955 shares
of Common Stock (5,350,455 shares if the underwriters' overallotment option is
exercised in full). The 2,450,000 shares of Common Stock offered hereby (and
the 367,500 shares if the underwriters' overallotment option is exercised in
full) will be freely tradeable in the open market. The remaining 2,572,955
shares that will be outstanding immediately after the Offering will be
eligible for sale in the open market pursuant to Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"), subject in the case of
2,243,360 shares, including shares held by all Executive Officers and
Directors and certain stockholders, to 180-day lock-up agreements and, in the
case of 40,000 shares held by a Selling Stockholder, to a 365-day lock-up
agreement, with the representatives of the Underwriters. See "Principal and
Selling Stockholders," "Shares Eligible for Future Sale" and "Underwriting."

IMMEDIATE AND SUBSTANTIAL DILUTION

Investors purchasing shares of Common Stock in the Offering will incur
immediate dilution of $2.39 per share in the net tangible book value of the
Common Stock from the initial public offering price. Additional dilution will
occur upon exercise of outstanding stock options. See "Dilution."

DIVIDENDS

The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. In addition, the payment of dividends is
prohibited by certain covenants in the Company's loan agreements. See
"Dividend Policy."

9
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $8.5 million ($10.4 million if the over-allotment option granted
to the Underwriters is exercised in full), after deduction of the underwriting
discount and estimated offering expenses. The Company expects to use
approximately $3.3 million to pay down the balances on its existing credit
facilities, consisting of a revolving line of credit in the amount of $2.7
million which bears interest annually at the prime rate and matures on
February 28, 1998, and a revolving term credit facility in the amount of
$670,000, which bears interest annually at the prime rate plus .25% and
matures on July 1, 1999. The proceeds from these loans were used by the
Company in the first fiscal quarter of 1997 to finance inventory and new store
construction. The Company also intends to finance, in conjunction with future
borrowings under the Company's credit facilities, approximately $3.1 million
of the total $6.3 million required for planned new store expansion over the
next 19 months, and to use approximately $350,000 to improve its point-of-sale
system. The remaining net proceeds will be used for working capital and for
other general corporate purposes. The expected applications of the net
proceeds represent the Company's best estimates based upon its present plans
and certain assumptions regarding general economic and industry conditions and
the Company's anticipated future revenues and expenditures. If the Company's
plans change, or its assumptions change or prove to be incorrect, the Company
may reallocate some of the net proceeds within the above described categories
or use the portions thereof for other purposes.

Pending the application of the net proceeds as described above, such
proceeds will be placed in interest-bearing bank accounts or invested in
short-term United States government securities, certificates of deposit of
major banks or high-grade commercial paper.

The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders.

DIVIDEND POLICY

The Company has not paid in the recent past and does not currently intend to
pay cash dividends on its Common Stock. The Company presently anticipates that
all of its future earnings will be retained for the development and expansion
of its business and, therefore, does not anticipate paying cash dividends on
its Common Stock in the foreseeable future. The payment of any future
dividends will be at the discretion of the Company's Board of Directors. In
addition, payment of dividends is prohibited by certain covenants in the
Company's loan agreements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" and Note 6 to the Financial Statements.

10
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of May
3, 1997, and as adjusted to give effect to the issuance and sale of shares of
Common Stock offered hereby at the initial public offering price of $6.00 per
share of Common Stock, less estimated underwriting discounts and estimated
offering expenses.

<TABLE>
<CAPTION>
MAY 3, 1997
-------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Line of credit, current installments of capital lease
obligations and current installments of long-term debt.... $ 2,950 $ 173
------- -------
Capital lease obligations and long-term debt, less current
installments.............................................. $ 707 $ 149
------- -------
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized, no shares issued and outstanding............ -- --
Common Stock, $.01 par value, 10,000,000 shares
authorized, 3,422,955 shares issued and outstanding;
5,022,955 shares, as adjusted(1)........................ 34 50
Additional paid in capital................................. 2,703 11,215
Retained earnings.......................................... 6,876 6,876
------- -------
Total stockholders' equity............................... $ 9,613 $18,141
------- -------
Total capitalization..................................... $13,270 $18,463
======= =======
</TABLE>
- --------
(1) Does not include 565,000 shares of Common Stock reserved for issuance
under the Company's stock option plans, of which options for 165,000
shares have been granted. See "Management--Stock Option Plans."

11
<PAGE>

DILUTION

Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value of their Common Stock
from the initial public offering price. The net tangible book value of the
Company at May 3, 1997, was approximately $9.6 million, or $2.81 per share.
Net tangible book value per share is equal to net tangible assets (tangible
assets of the Company less total liabilities) divided by the number of shares
of Common Stock outstanding. Net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of Common Stock in the Offering and the pro forma net tangible book
value per share of Common Stock immediately after completion of the Offering.
After giving effect to the sale of 1,600,000 shares of Common Stock offered by
the Company (after deducting the underwriting discount and estimated offering
expenses), the pro forma net tangible book value of the Company as of May 3,
1997, would have been approximately $18.1 million, or $3.61 per share. This
represents an immediate increase in net tangible book value of $.80 per share
to existing stockholders and an immediate dilution in net tangible book value
of $2.39 per share to purchasers of Common Stock in the Offering, as
illustrated in the following table:

<TABLE>
<S> <C> <C>
Initial public offering price per share of Common Stock........ $6.00
Net tangible book value per share of Common Stock at May 3,
1997........................................................ $2.81
Increase per share attributable to new investors............. .80
-----
Net tangible book value per share of Common Stock adjusted
for the Offering............................................ 3.61
-----
Immediate dilution per share of Common Stock to new investors.. $2.39
=====
</TABLE>

The following table sets forth certain information with respect to the
number of shares of Common Stock purchased from the Company, the total cash
consideration paid and the average price paid per share of Common Stock by
existing stockholders:

<TABLE>
<CAPTION>
COMMON STOCK
PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)... 3,422,955 68.1% $ 2,737,250 22.2% $ .80
New investors(1)........... 1,600,000 31.9 9,600,000 77.8 6.00
--------- ----- ----------- -----
Total...................... 5,022,955 100.0% $12,337,250 100.0%
========= ===== =========== =====
</TABLE>
- --------

(1) Sales by the Selling Stockholders in the Offering will reduce the number
of shares held by existing stockholders to 2,572,955 shares, or 51.2% of
the total number of shares of Common Stock outstanding after the Offering
and will increase the number of shares held by new investors to 2,450,000
shares, or 48.8% of the total number of shares of Common Stock outstanding
after the Offering.

The calculations set forth above do not give effect to the possible exercise
of options granted or to be granted under the Company's stock option plans.
See "Management--Stock Option Plans."

12
<PAGE>

SELECTED FINANCIAL DATA

The statement of income data and balance sheet data for fiscal 1996 and
fiscal 1995 and the statement of income data for fiscal 1994 are derived from
the Financial Statements of the Company included elsewhere in this Prospectus,
which have been audited by KPMG Peat Marwick LLP, independent auditors. The
statement of income data for fiscal 1993 and fiscal 1992 and the balance sheet
data for fiscal 1994, fiscal 1993 and fiscal 1992 have been derived from
financial statements of the Company not included in this Prospectus, which
have also been audited by KPMG Peat Marwick LLP. The selected financial data
for the three months ended May 3, 1997 and May 4, 1996 have been derived from
the Company's unaudited financial statements. In the opinion of management,
the unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
financial position and the results of operations as of and for these periods.
Operating results for the three months ended May 3, 1997 are not necessarily
indicative of the results that may be expected for the full year or for any
other period. The store operating data set forth below are unaudited. The
selected financial data set forth below should be read in conjunction with the
Company's Financial Statements and the related notes thereto included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
--------------------------------------------------------------- ----------------------
JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1993 1994 1995 1996 1997(1) 1996(1) 1997
----------- ----------- ----------- ----------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND STORE OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $ 11,794 $ 23,153 $ 31,335 $ 37,265 $ 44,563 $ 5,562 $ 7,287
Cost of sales and
occupancy expenses.... 7,365 14,861 20,788 23,957 28,630 4,299 5,730
----------- ----------- ----------- ----------- ----------- ---------- ----------
Gross profit........... 4,429 8,292 10,547 13,308 15,933 1,263 1,557
Selling, general and
administrative
expenses.............. 2,978 6,785 9,048 10,680 12,593 2,214 3,001
----------- ----------- ----------- ----------- ----------- ---------- ----------
Operating income
(loss)................ 1,451 1,507 1,499 2,628 3,340 (951) (1,444)
Interest expense, net.. 44 68 320 418 394 23 25
----------- ----------- ----------- ----------- ----------- ---------- ----------
Income (loss) before
income taxes.......... 1,407 1,439 1,179 2,210 2,946 (974) (1,469)
Income tax expense
(benefit)............. 580 600 460 906 1,210 (399) (602)
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net income (loss)...... $ 827 $ 839 $ 719 $ 1,304 $ 1,736 $ (575) $ (867)
=========== =========== =========== =========== =========== ========== ==========
Net income (loss) per
share(2).............. $ .32 $ .23 $ .20 $ .35 $ .49 $ (.16) $ (.25)
=========== =========== =========== =========== =========== ========== ==========
Weighted average number
of shares............. 2,590 3,625 3,666 3,738 3,522 3,530 3,519
STORE OPERATING DATA:
Selected Permanent
Store Data
Number of stores at
beginning of period... 17 23 27 33 37 37 44
Number of stores at end
of period............. 23 27 33 37 44 39 48
Total net sales........ $10,217,000 $12,720,000 $16,178,000 $20,241,000 $23,998,000 $3,479,000 $4,259,000
Percentage increase in
comparable store net
sales(3)(4)........... 4.2% 1.7% 2.9% 3.1% 3.5% 10.4% 4.9%
Total square footage at
end of period(5)...... 40,074 50,843 65,048 75,182 94,348 79,706 104,686
Average net sales per
square foot(3)(5)..... $ 307 $ 280 $ 274 $ 272 $ 275 $ 43 $ 42
Average net sales per
store(3)(5)........... $ 434,000 $ 495,000 $ 532,000 $ 544,000 $ 575,000 $ 89,000 $ 91,000
Selected Seasonal Store
Data
Number of stores at
beginning of period... 0 0 26 40 37 37 62
Peak number of stores
during period(6)...... 8 79 89 71 85 38 65
Total net sales........ $ 1,325,000 $10,323,000 $15,113,000 $17,019,000 $20,565,000 $2,083,000 $3,028,000
<CAPTION>
JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1993 1994 1995 1996 1997 1996 1997
----------- ----------- ----------- ----------- ----------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents........... $ 2,196 $ 727 $ 655 $ 1,620 $ 2,014 $ 49 $ 63
Working capital........ 4,495 4,579 4,479 4,972 5,818 4,527 5,326
Total assets........... 6,650 8,879 10,615 12,855 15,274 13,476 16,892
Total debt, including
capital lease
obligations........... 66 369 563 437 370 2,764 3,657
Stockholders' equity... 5,800 6,640 7,441 8,745 10,480 8,170 9,613
</TABLE>
- --------
(1) The fiscal year ended February 1, 1997 consisted of 53 weeks as compared
with 52 weeks in all prior years presented. The three months ended May 4,
1996 reflects a fourteen-week period as compared with the thirteen-week
period ended May 3, 1997.
(2) Computed based on the weighted average number of shares of common stock
and common stock equivalents, calculated using the treasury stock method.
For fiscal 1992 through 1995, the weighted average number of shares
includes 654,550 shares owned by the Company's Chairman which were subject
to an option granted by him to the Company's former President, which
option terminated unexercised on January 17, 1996. The 654,550 shares were
considered both as issued and outstanding and as common stock equivalents
issued by the Company for those fiscal years.
(3) Percentage increase in comparable store net sales, average net sales per
square foot and average net sales per store are adjusted to reflect a 52-
week year for all years presented and a thirteen-week fiscal quarter.
(4) A comparable store is defined as a permanent store which was open as a
permanent store for at least one full fiscal year as of the beginning of
the fiscal year.
(5) Average net sales per square foot and average net sales per store include
only stores open for the entire fiscal period. Total square footage at end
of period reflects the gross leased space of permanent stores open at the
end of the period.
(6) Reflects the greatest number of seasonal stores open at any one time
during the period, which is historically during the fourth quarter of a
fiscal year.

13
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Financial Statements and the notes thereto
and "Selected Financial Data" included elsewhere in this Prospectus.
Historical operating results are not necessarily indicative of future results.

OVERVIEW

The Company is a leading speciality retailer of a variety of traditional and
distinctive science and nature products. The Company's net sales have grown
from $11.8 million in fiscal 1992 to $44.6 million in fiscal 1996, primarily
due to the Company's store expansion program and, to a lesser extent,
increases in comparable store net sales. The Company's retail establishments
consist of permanent and seasonal stores. Permanent World of Science stores
are open year-round under long-term leases, contain an average of 2,000 square
feet of selling space, maintain approximately 2,600 SKUs in inventory, and are
characterized by an upscale store facade and interior fixture package.
Seasonal stores are open during the holiday selling season, or for an extended
period beyond the holiday selling season, under shorter term leases with terms
ranging from month-to-month to three years. Seasonal stores contain an average
of 1,500 square feet of selling space, maintain approximately 1,950 SKUs in
inventory and are typically located in available in-line mall space. The cost
of opening seasonal stores is substantially lower and the lead time is
substantially shorter than those associated with permanent stores.

Since the Company's opening of its first World of Science store in 1984, the
Company has expanded to 49 permanent World of Science stores as of May 31,
1997. Since opening its first seasonal store in fiscal 1992, the Company has
increased the use of this store format, operating 85 seasonal stores during
the fiscal 1996 holiday selling season. The Company strives to maintain an
appropriate balance between permanent stores and seasonal stores, taking into
account such factors as management time demands, return on investment and site
availability. While the Company will continue its active program of seasonal
store operations, it is placing increasing emphasis on the opening of new
permanent stores. The Company presently anticipates opening a total of 12 new
permanent stores in fiscal 1997, five of which had been opened as of May 31,
1997, and 18 new permanent stores in fiscal 1998. The Company presently
anticipates operating approximately 100 seasonal stores during the fiscal 1997
holiday selling season and 120 seasonal stores during the fiscal 1998 holiday
selling season.

The Company's business is subject to substantial seasonal variations.
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 net
sales have generally been significantly lower from January through October,
resulting in losses in the first three fiscal quarters. The Company expects
that, given its dependence on the holiday selling season, it will continue to
experience losses in the first three fiscal quarters. In addition, as a result
of the Company's planned expansion, management believes that the Company may
experience greater losses in the first three quarters of fiscal 1997 than it
has experienced over the past two years.

Net sales consist almost entirely of merchandise purchased by customers in
the Company's stores. The Company's cost of sales and occupancy expenses
include the cost of operating the distribution center and other expenses
associated with acquiring inventory. Selling, general and administrative
expenses include non-occupancy store expenses and administrative overhead
expenses. The Company recognizes all expenses associated with the opening of
new permanent and seasonal stores as they are incurred, with the exception of
leasehold improvements and fixtures, which are capitalized. The cost of
closing stores is expensed in the period in which the decision to close the
store is made. The Company has not closed a permanent store since fiscal 1993.

A comparable store is a permanent store which has been open as a permanent
store for at least one full fiscal year as of the beginning of the fiscal
year. Comparable store net sales increases for fiscal 1994, 1995 and 1996 were
2.9%, 3.1% and 3.5%, respectively. The number of comparable stores in fiscal
1994, 1995 and 1996 was 22, 27 and 33, respectively. Although the average net
sales per permanent store has increased in each of the last three fiscal
years, average net sales per square foot for permanent stores has remained
relatively constant as a result of the Company increasing the size of
permanent stores opened. Comparable store net sales in the first quarter of
fiscal 1997 increased 4.9% and the number of comparable stores was 37.

14
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the fiscal years indicated, certain
financial data as a percentage of net sales. Results for any one or more
periods are not necessarily indicative of future results.

<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF NET SALES NET SALES FOR
FOR FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------------- ----------------------
JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1995 1996 1997(1) 1996(1) 1997
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales and
occupancy expenses..... 66.3 64.3 64.2 77.3 78.6
----- ----- ----- --------- ---------
Gross profit............ 33.7 35.7 35.8 22.7 21.4
Selling, general and ad-
ministrative expenses.. 28.9 28.7 28.3 39.8 41.2
----- ----- ----- --------- ---------
Operating income
(loss)................. 4.8 7.0 7.5 (17.1) (19.8)
Interest expense, net... 1.0 1.1 0.9 0.4 0.3
----- ----- ----- --------- ---------
Income (loss) before
income taxes........... 3.8 5.9 6.6 (17.5) (20.1)
Income tax expense (ben-
efit).................. 1.5 2.4 2.7 (7.2) (8.2)
----- ----- ----- --------- ---------
Net income (loss)....... 2.3% 3.5% 3.9% (10.3)% (11.9)%
===== ===== ===== ========= =========
</TABLE>
- --------
(1) The fiscal year ended February 1, 1997 consisted of 53 weeks as compared
with 52 weeks in all prior years presented. The three months ended May 4,
1996 reflects a fourteen-week period as compared with the thirteen-week
period ended May 3, 1997.

Comparison of Three Months Ended May 3, 1997 to Three Months Ended May 4,
1996

Net Sales. Net sales increased to $7.3 million from $5.6 million, an
increase of $1.7 million, or 30.4%. The first quarter of fiscal 1997
represented a thirteen-week period, as compared to a fourteen-week period in
fiscal 1996. Of the $1.7 million increase in net sales: $778,000 was
attributable to four new permanent stores opened during the first quarter of
fiscal 1997 and seven new permanent stores not in operation the full quarter
of the prior year; $2,000 was attributable to increased comparable store net
sales; and $945,000 was attributable to net sales derived from an increased
number of seasonal stores operated during the first quarter of fiscal 1997.
Comparable store net sales for the Company's permanent stores increased 4.9%
for the thirteen-week period ended May 3, 1997.

Cost of Sales and Occupancy Expenses. Cost of sales and occupancy expenses
increased to $5.7 million from $4.3 million, an increase of 32.6%. As a
percentage of net sales, it increased to 78.6% from 77.3%. The dollar increase
was due to increased store occupancy costs from more stores in operation in
the first quarter of fiscal 1997, and increased costs of sales due to higher
net sales. The increase as a percentage of net sales of 1.3% was attributable
to a 0.3% decrease in margins for products sold and a 1.0% increase in
occupancy expenses caused by the comparison of a thirteen-week period in the
first quarter of fiscal 1997 to a fourteen-week period in the first quarter of
fiscal 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $3.0 million from $2.2 million, an
increase of 36.4%. 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 41.2% from
39.8%, primarily as a result of a severance payment of $65,000 to the former
President of the Company.

Interest Expense, Net. Net interest expense increased to $25,000 in the
first quarter of fiscal 1997 from $23,000 in the first quarter of fiscal 1996,
primarily as a result of increased new permanent store construction borrowing.

15
<PAGE>

Comparison of Fiscal 1996 to Fiscal 1995

Net Sales. Net sales increased to $44.6 million from $37.3 million, an
increase of $7.3 million, or 19.6%. Of this increase in net sales: $2.9
million was attributable to seven new permanent stores opened during fiscal
1996 and four permanent stores in operation for less than one year as of the
beginning of fiscal 1996; $798,000 was attributable to increased comparable
store net sales; and $3.6 million was attributable to net sales derived from
an increased number of seasonal stores operated during fiscal 1996, which more
than offset the slight decrease in average seasonal store net sales during the
holiday selling season. Comparable store net sales for the Company's permanent
stores increased 3.5% in fiscal 1996.

Cost of Sales and Occupancy Expenses. Cost of sales and occupancy expenses
increased to $28.6 million from $24.0 million, an increase of 19.2%. As a
percentage of net sales, it decreased slightly to 64.2% from 64.3%. The dollar
increase was due to increased store occupancy costs from more stores in
operation in fiscal 1996 and increased costs of sales due to higher net sales,
although these costs as a percentage of net sales remained relatively
constant.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $12.6 million from $10.7 million, an
increase of 17.8%, but decreased to 28.3% from 28.7% as a percentage of net
sales. Although selling, general and administrative expenses increased to
support higher net sales levels, the Company was able to spread the fixed
portion of corporate overhead over an increased sales base.

Interest Expense, Net. Net interest expense decreased to $394,000 in fiscal
1996 from $418,000 in fiscal 1995, primarily as a result of lower average
borrowing costs during fiscal 1996.

Comparison of Fiscal 1995 to Fiscal 1994

Net Sales. Net sales increased to $37.3 million from $31.3 million, an
increase of $6.0 million, or 18.9%. Of this increase in net sales: $3.6
million was attributable to four new permanent stores opened during fiscal
1995 and six new permanent stores in operation for less than one year as of
the beginning of fiscal 1995; $443,000 was attributable to increased
comparable store net sales; and $1.9 million was attributable to increased
seasonal store net sales. The increase in seasonal store net sales was due to
a greater number of stores being open for the full year in fiscal 1995, as
compared to fiscal 1994, and a significant increase in average seasonal store
net sales during the fiscal 1995 holiday selling season, which more than
offset any negative impact from a reduction in the peak number of seasonal
stores from fiscal 1994 to fiscal 1995. Comparable store net sales for the
Company's permanent stores increased 3.1% in fiscal 1995.

Cost of Sales and Occupancy Expenses. Cost of sales and occupancy expenses
increased to $24.0 million from $20.8 million, an increase of 15.4%. As a
percentage of net sales, costs of sales and occupancy expenses decreased to
64.3% from 66.3%. The dollar increase was primarily due to increased costs of
sales from higher net sales. The decrease as a percentage of net sales was due
to increased efficiencies and productivity gains in the distribution center
achieved as a result of implementing a real-time inventory management and
location system, and lower product costs attributable to volume purchasing and
more favorable vendor negotiations. Store occupancy costs as a percentage of
net sales was relatively unchanged in fiscal 1995 as compared to fiscal 1994.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $10.7 million from $9.0 million, an
increase of 18.9%, but decreased as a percentage of net sales to 28.7% from
28.9%. The dollar increase is attributable to higher net sales levels.

Interest Expense, Net. Net interest expense increased to $418,000 for fiscal
1995 from $320,000 in fiscal 1994, primarily as a result of increased levels
of borrowing and higher borrowing costs.

16
<PAGE>

Seasonality and Quarterly Results

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. The
following table shows certain quarterly information for the Company for fiscal
1995 and fiscal 1996 and the first quarter of fiscal 1997. The information is
unaudited and has been derived from the Company's interim financial statements
and includes, in the opinion of the Company's management, all adjustments
(consisting only of normal, recurring accruals) necessary for a fair
presentation of the results for such interim periods. Results for any one or
more periods are not necessarily indicative of future results.

<TABLE>
<CAPTION>
FISCAL
FISCAL 1995 FISCAL 1996 1997
---------------------------------- ---------------------------------- -------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AND STORE OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ 4,192 $5,485 $ 5,718 $21,870 $5,562 $6,370 $ 6,925 $25,706 $ 7,287
Gross profit............ 849 1,364 1,311 9,784 1,263 1,558 1,469 11,643 1,557
Operating income
(loss)................. (1,236) (724) (1,222) 5,810 (951) (825) (1,655) 6,771 (1,444)
Net income (loss)....... (751) (502) (810) 3,367 (575) (545) (1,069) 3,925 (867)
Net income (loss) per
share(1)............... $ (.20) $ (.13) $ (.22) $ .90 $ (.16) $ (.15) $ (.30) $ 1.10 $ (.25)
STORE OPERATING DATA:
New permanent stores
opened during period... 3 0 1 0 2 1 3 1 4
Permanent stores
operated at end of
period................. 36 36 37 37 39 40 43 44 48
Peak number of seasonal
stores during period... 40 40 66 71 38 46 75 85 65
</TABLE>
- --------
(1) Computed based on the weighted average number of shares of common stock
and common stock equivalents, calculated using the treasury stock method.
For fiscal 1995, the weighted average number of shares includes 654,550
shares owned by the Company's Chairman and which were subject to an option
granted by him to the Company's former President, which option terminated
unexercised on January 17, 1996. Those shares are treated as both issued
and outstanding and as common stock equivalents for that fiscal year.

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
financings and bank borrowings. Seasonal working capital needs have been met
through short-term borrowings under a revolving line of credit.

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 from
operations decreased to $2.4 million in fiscal 1996 from $2.7 million in
fiscal 1995 due to increased levels of inventories and other working capital
items. Cash flow utilized by operations increased to $4.8 million in the first
quarter of fiscal 1997 from $3.5 million in the first quarter of fiscal 1996
due to a greater first quarter net loss, increased levels of inventories and
other working capital items in the first quarter of fiscal 1997.

17
<PAGE>

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
Company's maximum borrowing capacity under this line was $10.7 million in
fiscal 1996, $10.1 million in fiscal 1995 and $9.4 million in fiscal 1994 and
its minimum borrowing capacity in those fiscal years was $4.8 million, $4.2
million and $3.7 million, respectively. The line expires on February 28, 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 intends to seek renewal of this line
of credit prior to its expiration, but there can be no assurance that the line
of credit will be renewed or renewed on the same terms as the existing line of
credit. 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 February 1, 1997, there were no
amounts outstanding under either of these lines of credit, and, as of May 3,
1997, there was a principal balance of $2.7 million under the revolving line
of credit and a principal balance of $670,000 under the revolving term credit
facility. Primarily as a result of the holiday selling season, the Company
experiences significant seasonal fluctuations in its financing needs. Maximum
borrowings under the Company's revolving credit facilities peaked at $11.5
million, $8.9 million, and $9.5 million during fiscal 1996, fiscal 1995, and
fiscal 1994, respectively, and averaged $4.2 million, $4.2 million, and $3.3
million, respectively, for those fiscal years. 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 $115,000 at May 3, 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 May 3, 1997, outstanding capital lease obligations and total
debt amounted to $3.7 million, of which $207,000 represented capital lease
obligations. The capital lease obligations have terms expiring in fiscal 1999.
The increased borrowings in the first quarter of fiscal 1997 were used to
purchase inventory after the holiday selling season and to finance new store
construction.

The capital expenditures associated with the opening of new permanent stores
range from $225,000 to $255,000, before landlord build-out allowances, if any,
which vary from site to site. In addition, the Company initially stocks each
new permanent store with approximately $90,000 to $100,000 of inventory, with
peak inventory levels during the holiday selling season reaching approximately
$150,000 per store. The capital expenditures associated with opening a
seasonal store are nominal as these stores require minimal build-out and
utilize reusable fixtures. Each seasonal store is initially stocked with
approximately $50,000 of inventory, with peak inventory levels during the
holiday selling season reaching approximately $80,000 per store. It typically
takes 4 to 6 months from the time a lease is executed to the opening of a
permanent store for business. The lead time for a seasonal store is
substantially shorter. Pre-opening expenses for both permanent and seasonal
stores are minimal, and are expensed as incurred.

Capital expenditures in fiscal 1996, net of landlord build-out allowances,
were $1.7 million, as compared to $1.6 million in fiscal 1995. The Company
anticipates capital expenditures of approximately $2.5 million in fiscal 1997.
In addition to the cost of new store construction, the Company expects to make
capital expenditures of approximately $350,000 to upgrade its point-of-sale
systems and has invested approximately $300,000 for the relocation and
expansion of its distribution center to support planned store growth through
fiscal 1999.

Management believes that operating cash flow, borrowings under the Company's
existing credit facilities, cash on hand and the net proceeds to be received
by the Company from this Offering, will be sufficient to finance the Company's
proposed expansion of its store base and to satisfy any other capital
requirements for at least the next two years.

18
<PAGE>

BUSINESS

INTRODUCTION

World of Science is a leading specialty retailer of a variety of traditional
and distinctive science and nature products. The Company's merchandising
strategy emphasizes both the educational and entertainment values of its
products, which are offered at competitive prices in a stimulating retail
environment. World of Science has developed a broad customer base, as its
products appeal to customers of all ages for gift-giving, educational use and
entertainment. The Company operates both a permanent and seasonal store
format. At May 31, 1997, the Company operated 49 permanent stores and 65
seasonal stores in 29 states, primarily in enclosed malls.

Permanent World of Science stores are open year-round under long-term
leases, contain an average of 2,000 square feet of selling space and maintain
approximately 2,600 SKUs of inventory. Permanent stores are also generally
characterized by an upscale store facade and interior fixture package.
Seasonal stores are open during the holiday selling season, or for an extended
period beyond that season, under leases with shorter terms. Seasonal stores
contain an average of 1,500 square feet of selling space, maintain
approximately 1,950 SKUs of inventory, occupy available in-line mall space,
require minimal store build-out and employ reusable fixtures.

The Company was founded in Rochester, New York in 1969, primarily to develop
and manufacture science kits for school systems. In 1973, the Company began
selling science and nature products through a mail order catalog and, in 1984,
opened its first retail store in the Rochester Museum and Science Center.
Based upon the success of its science and nature retail concept locally, the
Company decided in the late 1980's to focus exclusively on the retail store
segment of its business and discontinued its manufacturing operations. Its
catalog operations were phased out commencing in fiscal 1991.

BUSINESS STRATEGY

. DISTINCTIVE AND TRADITIONAL MERCHANDISE. World of Science stores offer a
variety of educationally and entertainment-oriented, distinctive science and
nature products, together with a broad assortment of more traditional
science and nature products. Many of the products offered in World of
Science stores are not widely available from other retailers within the
malls occupied by the Company's stores. The Company continually seeks new
and distinctive products and, accordingly, updates approximately one-third
of its SKUs annually.

. USE OF SEASONAL STORES. The seasonal store program enables the Company to
reach a broader customer base during the holiday selling season, as well as
to test prospective locations for permanent stores before making the
required capital investment. The Company opportunistically seeks out
available in-line space in quality shopping malls which it can lease for
several months around the holiday selling season and, in some instances, for
an extended period thereafter. The cost of opening seasonal stores is
substantially lower and the lead time is substantially shorter than those
associated with permanent stores. In fiscal 1996, 46.1% of the Company's
total net sales were generated by seasonal stores. The Company's flexible
store formats, combined with its distinctive merchandise, make World of
Science stores attractive to mall operators.

19
<PAGE>

engage in frequent storewide sales or price mark-downs and believes it uses
sales and price mark-downs to a lesser degree than other retailers. The
Company believes that its pricing strategy fosters customer trust and
confidence.

EXPANSION STRATEGY

. NEW PERMANENT STORE OPENINGS. The Company currently operates 49 permanent
World of Science stores, including five new permanent stores which have
opened since the beginning of fiscal 1997. The Company expects to open a
total of approximately 12 permanent stores in fiscal 1997 and approximately
18 permanent stores in fiscal 1998 in both new and existing markets. In many
cases, permanent stores will replace seasonal stores and, in appropriate
circumstances, the Company may acquire or assume pre-existing leases of
other retail stores. Although the Company may also evaluate opening stores
in non-mall locations, such as airports and museums, the Company has no
commitments for new permanent stores in non-mall locations. Of the 12 new
permanent stores the Company anticipates opening during fiscal 1997, five
stores had been opened as of May 31, 1997, three additional stores were
under construction and several other sites were under evaluation.

. ACTIVE SEASONAL STORE PROGRAM. The Company operated 85 World of Science
seasonal stores during the fiscal 1996 holiday selling season and currently
operates 65 seasonal stores. During the past three fiscal years, the Company
has only opened one permanent store in a pre-existing mall which was not
preceded by a seasonal store in the same mall. The Company plans to operate
approximately 100 seasonal stores during the holiday selling season in
fiscal 1997 and approximately 120 seasonal stores in fiscal 1998.

. COMMITMENT TO STRONG INFRASTRUCTURE. The Company's expansion strategy
includes a commitment to make appropriate infrastructure investments. Over
the past two years, the Company has made significant investments in its
management information systems and distribution facilities, which have
contributed to efficiencies in inventory management and product
distribution. In the second quarter of fiscal 1997, the Company relocated
its distribution facility to a larger facility. The Company also plans to
enhance its point-of-sale system in fiscal 1997 and 1998. The Company
periodically evaluates its store formats to maintain high standards of
attractiveness and an appropriate showcase for its science and nature
products.

MERCHANDISING

The Company's merchandising strategy emphasizes both the educational and
entertainment values of its products, which are offered at competitive prices
in a stimulating retail environment. The Company has a broad customer base and
its products appeal to customers of all ages for gift giving, educational use
and entertainment. Many of the products offered in World of Science stores are
not widely available from other retailers within the malls occupied by the
Company's stores. Each permanent store carries approximately 2,600 SKUs
displayed in separate product areas. The Company generally does not carry
licensed products or mass market television advertised products. In most
product categories, the Company offers a variety of traditional science and
nature products that customers would expect to encounter in a science and
nature store. These more traditional products are displayed together with the
Company's distinctive items. The Company is continually seeking new,
distinctive products consistent with its merchandising strategy. Historically,
the Company has updated approximately one-third of the items in its
merchandise assortment annually.

20
<PAGE>

The Company's merchandising team attends trade shows to identify potential
new products, and the Company evaluates all new products prior to offering
them for sale in its stores. In addition, the Company seeks input and
suggestions from its store personnel and customers, and product selections are
sometimes made based upon such recommendations. The Company occasionally
designs its own products which are manufactured by third party sources. For
example, the Company's best-selling telescope product was designed by the
Company to be more user-friendly and to incorporate features not generally
found in comparably priced telescopes. The Company also employs a staff
geologist, who is responsible for evaluating mineral and fossil specimens for
sale in World of Science stores.

A typical permanent World of Science store has approximately 25 different
product areas and seasonal stores generally feature approximately 20 different
product areas, focused upon specific merchandising themes. The Company's
themes follow a strategically planned layout which encourages customers to
visit every theme within the store. Although not all of the available
merchandising themes are included in each World of Science store, the
following is a list of the principal merchandising themes, together with a
description of the typical products included in these themes.

<TABLE>
<C> <S>
. Activity Kits arts and crafts, behavioral science, archeology and
paleontology
. American Craftsman limited production kaleidoscopes, glass and metal
sculptures, jewelry, pottery bowls, vases and
decorative pieces with natural images
. Anatomy anatomical models, charts and books
. Animal Replicas mammals, marine life, reptiles, amphibians and insects
represented in self-assembled, molded or plush replicas
. Apparel distinctive T-shirts, hats and kits for ties and
scarves
. Astronomy telescopes, star finder charts, instructional models,
solar system charts and mobiles
. Biology microscopes, related labware, books for reference and
science projects, petri dishes, microscope sets and
slide sets
. Bird Watching binoculars, feeders, houses, field identification
guides, bird calls and books
. Botany & Garden
Accessories fountains, seed kits, figurines, plant growing kits,
garden sculpture, wind chimes and bells
. Chemistry experiment kits, science project resources, technical
labware and reference books
. Dinosaurs molded replicas, models, puzzles, games, books and kits
. Flight model rocketry, kites, boomerangs and flight discs
. Food Making kits for making chewing gum, chocolate, soda and
flavored vinegar
. Geography compasses, hiking staffs, educational puzzles, games
and maps
. Geology quality mineral and fossil collectibles for the
beginner to serious collectors
. Glow in the Dark astronomical and animal designs
. Impulse fascinating pick-up items, including spinning tops,
keychains, magnets and travel puzzles
. Jewelry natural gemstone, titanium, glass and nature images
. Magnetism magnets, building kits, floating tops and science
project kits
. Nostalgia old-fashioned toys and games
. Optics magnifiers, a wide range of kaleidoscopes and
teleidoscopes
. Physics traditional construction sets and robotic models
. Puzzles and Games jigsaw puzzles, brainteasers, travel games and other
board games
. Recorded Music music with enhancements of nature sounds, music for
relaxation and Celtic music
. Relaxation massage tools, books, aromatherapy, reflexology and
stress management
. Weather weather instruments, solar kits, umbrellas and
reference books
</TABLE>

Offering quality products at fair prices is a key element in the Company's
business strategy. The Company does not engage in frequent storewide sales or
price mark-downs and it believes it uses sales and price mark-

21
<PAGE>

downs to a lesser degree than other retailers. The price range of products
carried by World of Science stores generally vary from less than $1.00 to
$1,000. The average customer transaction in fiscal 1996 was $20.30 for the
five-weeks ending December 28, 1996 and was $16.42 for the entire fiscal year.

PURCHASING AND DISTRIBUTION

The Company purchases its products from over 450 sources and is continually
in search of additional suppliers. The Company's merchandising team includes
the Company's President, Vice President of Operations and Merchandising
Manager. This team and other representatives of the Company attend trade shows
to identify potential new product sources. The Company's top 20 product
sources accounted for 45.7% of total purchases in fiscal 1996 and 54.2% of
total purchases in fiscal 1995. No single supplier furnished products
representing more than 6.4% of net sales in fiscal 1996.

Inventory levels for each store, both on a SKU and dollar level, are
monitored weekly, with automatic replenishment orders made through the
Company's management information systems. This is accomplished based on a pre-
determined, maximum/minimum SKU stocking control system. Maximum/minimum SKU
inventory levels are reviewed and, if warranted, adjusted on a seasonal basis,
most notably in preparation for the year-end holiday selling season, and are
closely monitored for Company-wide stock reordering and initial holiday
orders. The Company typically ships products via ground freight for new store
inventory stocking or existing store replenishment orders. Replenishment
orders are typically filled within three days.

The Company recently relocated to a 110,000 square foot distribution center
in Rochester, New York, less than one mile from the Company's corporate
offices, from which it conducts all of its inventory management, receiving and
shipping. The Company had previously used a 55,000 square foot distribution
center and had historically entered into short-term leases for additional
warehouse space during the third fiscal quarter to accommodate inventory
requirements in anticipation of the holiday selling season. Management
believes that its new distribution facility will eliminate the need to lease
additional inventory storage space in anticipation of holiday selling seasons
through fiscal 1999. The current geographic concentration of its stores
enables the Company to make deliveries to stores on a weekly basis and enables
it to restock its stores' inventories promptly and efficiently from its
distribution center. Deliveries are generally made through common carriers.
The distribution center uses a personal computer based inventory location
management system which incorporates real time radio frequency ("RF") features
to enable distribution center personnel to receive, store, pick and check
incoming and outgoing orders by SKU in a paperless process. Because this
system tracks inventory by location, order pickers are directed by hand-held
RF terminals to bar-coded SKU locations in the sequence in which product is
stored in the warehouse. The order pickers are prompted to pick the proper
quantity to fill orders to replenish the stores, thus allowing orders to be
efficiently picked.

STORE OPERATIONS

The Company's products are displayed to encourage customers to browse,
experiment with, and examine the features and quality of the products as the
store layout guides them through up to 25 different product areas. World of
Science stores offer customers an educational and entertaining shopping
environment where experimentation and play are integral components of the
buying experience. Management believes that providing well-trained,
knowledgeable and friendly store personnel is a key aspect of its business
strategy and contributes to the shopping experience. The Company's products
lend themselves to explanations and demonstrations, and store personnel with
product knowledge can assist customers with purchasing decisions. All store
personnel are trained in customer service, product features and the store's
point-of-sale system.

The Company's store operations are managed by its Vice President of
Operations, who oversees a staff consisting of a regional manager, eleven
district managers and five area managers. The Company is presently seeking to
employ one additional regional manager. The regional manager oversees the
Company's district managers, who, in turn, may supervise one or more area
managers. District managers also oversee specific stores

22
<PAGE>

that are not managed by area managers. District and area managers are
responsible for all aspects of the operations of stores in defined market
areas. All World of Science stores are generally staffed with one store
manager, and permanent stores typically also have an assistant store manager.
Store managers are responsible for many aspects of store operations, including
store staffing and development, visual presentation and shrinkage control.
However, merchandise replenishment is controlled centrally, to ensure adequate
inventory levels, consistent with the rate of sale at each store. All store
management personnel are paid on a salary basis and, as an incentive to
increase sales, are eligible to receive bonuses based on the store's sales
performance during each fiscal year. World of Science stores have a sales
staff of approximately eight hourly employees in permanent stores and
approximately five hourly employees in seasonal stores. The number of hourly
employees increases to about 20 in permanent stores and 10 in seasonal stores
during the holiday selling season.

Permanent stores contain on average 2,000 square feet of selling space and
offer approximately 2,600 SKUs. The Company's permanent stores have an upscale
design which generally includes mahogany and brass fixturing, river-rock and
wood store facades and open product displays that encourage customers to
experiment and play with the merchandise. The Company periodically evaluates
its permanent store format to assure an upscale, modern appearance with eye-
catching window displays. In the case of the Company's newest permanent
stores, the Company updated its store format to include more open storefronts
and brighter interior spaces. Although the Company generally ensures that all
of its permanent stores employ the Company's upscale decorative style, the
Company may use less expensive facades and fixtures to adapt to particular
malls and markets. On average, the Company has refurbished its permanent
stores every three years.

Seasonal stores are typically opened in sites requiring minimal build-out
and are fixtured with wall systems and merchandise displays that can be
disassembled and re-used in other seasonal store locations. Seasonal stores
also carry lower inventory levels than permanent stores. A typical seasonal
store carries about 75% of the SKUs featured in the Company's permanent stores
and averages approximately 1,500 square feet of selling space. Seasonal stores
operate on month-to-month or short term leases of up to three years. The lead
time in opening a seasonal store is substantially shorter than the lead time
for permanent stores, enabling the Company to react quickly to market
opportunities.

World of Science stores are open seven days a week and the typical hours of
operation are from 10:00 a.m. to 9:00 p.m. Monday through Saturday and 11:00
a.m. to 6:00 p.m. on Sunday, with extended hours during the holiday selling
season. The Company's stores are generally open during the same business hours
as the enclosed malls in which they operate. Except with respect to
advertising required under certain of its mall leases, the Company does not
presently rely on advertising to generate sales and is dependent upon mall
traffic to attract customers.

23
<PAGE>

STORE LOCATIONS AND PROPERTIES

The following table provides information concerning the location, type, and
number of stores operated by the Company.

<TABLE>
<CAPTION>
PEAK NUMBER OF
SEASONAL STORES
PERMANENT STORES SEASONAL STORES DURING FISCAL 1996
STATE AT MAY 31, 1997 AT MAY 31, 1997 HOLIDAY SELLING SEASON
----- ---------------- --------------- ----------------------
<S> <C> <C> <C>
Alabama............. 1 - 2
Arkansas............ - 1 1
Connecticut......... 3 1 2
Delaware............ 1 - -
Florida............. 6 6 6
Georgia............. - 2 3
Illinois............ - 2 2
Indiana............. 1 - 1
Iowa................ - 1 1
Kentucky............ - 1 2
Louisiana........... - 2 1
Maryland............ 2 3 3
Massachusetts....... 4 3 5
Michigan............ - 3 5
Mississippi......... - 1 2
Missouri............ - - 1
New Hampshire....... 1 2 3
New Jersey.......... 3 1 3
New York............ 11 5 7
North Carolina...... - 3 4
Ohio................ 2 11 9
Pennsylvania........ 6 5 6
Rhode Island........ - 1 1
South Carolina...... - 1 2
Tennessee........... 4 - 1
Texas............... - 5 7
Vermont............. - 1 1
Virginia............ 3 1 1
West Virginia....... 1 2 2
Wisconsin........... - 1 1
--- --- ---
Total............... 49 65 85
=== === ===
</TABLE>

World of Science stores are generally located in high traffic areas of
regional, enclosed shopping malls. The Company believes that the number of
desirable store sites likely to be available in the future will be adequate to
permit the Company to implement its expansion strategy. In selecting new store
locations, the Company evaluates the market areas, mall locations, anchor
stores, mall traffic patterns, mall sales per square foot, performance of
other speciality retail tenants, competition and occupancy, construction and
other costs associated with opening a store.

At May 31, 1997, the Company's 49 permanent stores occupied 106,848 gross
square feet of leased space, with the stores ranging in size from 1,000 to
3,000 square feet. The Company's permanent stores typically have lease terms
ranging from seven to ten years, and the lease terms for existing permanent
stores expire between 1998 and 2008. Seasonal stores have lease terms ranging
from month-to-month to three years. The Company's store leases generally
provide for percentage rent based upon sales. See Note 4 of the Notes to the
Company's Financial Statements.

24
<PAGE>

The Company's corporate headquarters are located in a 35,000 square foot
facility which is comprised of 8,000 square feet of office space and 27,000
square feet of warehouse space. The facility is leased from the State of New
York at an annual rent of approximately $78,000. The term of this lease,
inclusive of three five-year renewal options, expires in 2013, and the lease
provides for rental increases for each renewal term based on increases in the
consumer price index, not to exceed 20% of the then current rent.

The Company recently entered into a sublease for a new distribution center.
The facility, which is located within one mile of the Company's office,
contains approximately 110,000 square feet of warehouse space. The sublease is
triple net and is for a term of 37 months ending in the year 2000, and the
Company has two one-year renewal options. The base monthly rental for this
facility is approximately $31,500.

MANAGEMENT INFORMATION SYSTEMS

The Company uses an IBM AS/400 (model 510) for its management information
systems, which handles all major informational requirements of the Company's
business, including sales, warehousing and distribution, purchasing, inventory
control, merchandise planning and replenishment as well as various accounting
functions. At the store level, the Company uses a point-of-sale computer
system with the capability to provide sales data and to maintain perpetual
inventory data on a per-SKU basis. All software applications which run on the
AS/400 are licensed by World of Science and have been customized according to
Company specifications.

The Company tracks its inventory by electronic data interchange between the
AS/400 and the Company warehouse and its stores. All inventory is bar-coded
where practical. The system polls each of its stores each evening to upload
sales data, to update inventory status and to determine replenishment
requirements. Weekly sales information is retained for each store, allowing
the Company to analyze sales performance by store, market and SKU.

COMPETITION

Competition for consumer spending is highly intense among specialty
retailers, traditional department stores and mass merchants in regional
shopping malls and other high traffic retail locations. The Company competes
against other retailers for suitable real estate locations and qualified
personnel. The Company believes that its distinctive and traditional
merchandise, educational and entertaining shopping experience, superior
customer service, use of seasonal stores and price integrity distinguishes it
from other specialty retailers. The specialty retail business has few barriers
to entry. In addition, as the Company expands into new markets, its success
may depend in part on its ability to gain market share from established
competitors. Many of the Company's competitors have substantially greater
financial, marketing and other resources than the Company. There can therefore
be no assurance that the Company will be able to compete successfully with
them in the future.

EMPLOYEES

As of May 3, 1997, the Company employed 215 regular full-time employees, of
which 169 were salaried staff and 46 were hourly workers. The Company also
employed 632 part-time employees. The Company regularly supplements its work
force with part-time employees during the holiday selling season. The Company
employed approximately 1,300 part-time employees during the fiscal 1996
holiday selling season. Substantially all of the Company's part-time employees
work at the store level. None of the Company's employees are represented by
labor unions and the Company believes its employee relations are very good.

LEGAL PROCEEDINGS

The Company is a party to legal proceedings from time to time in the normal
course of its business. In the opinion of management, any liability that the
Company might incur upon the resolution of these proceedings will not, in the
aggregate, have a material adverse effect on the Company's business, financial
condition and results of operations. The Company maintains general liability
insurance coverage in amounts deemed to be adequate by management.

25
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth certain information with respect to executive
officers, directors and certain other key employees of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
---- --- ----------------

Directors and Executive Officers

<S> <C> <C>
Fred H. Klaucke................ 60 Chairman of the Board of Directors, President and
Chief Executive Officer
Charles A. Callahan............ 47 Vice President of Finance, Chief Financial Officer and
Assistant Secretary
Christine M. Luchi............. 44 Vice President of Operations
Richard B. Callen.............. 55 Secretary, Director
Thomas A. James................ 55 Director
Thomas J. Scanlon.............. 50 Director

Other Key Employees

Kathryn A. Bull................ 40 Regional Manager
Alden B. Chevlen............... 46 Director of Leasing
Russell E. Eliason............. 33 Controller
Jason E. Torchia............... 31 MIS Manager
Paul H. Thompson............... 43 Merchandise Manager
Peter A. Roden................. 40 Warehouse Manager
</TABLE>
- --------
FRED H. KLAUCKE is the founder of the Company and has served as Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its incorporation in 1969 and as President since 1996.

CHARLES A. CALLAHAN has served as Vice President of Finance and Chief
Financial Officer of the Company since 1994, and as Assistant Secretary since
1992. Mr. Callahan joined the Company as Controller in 1992. He has over 25
years of experience in accounting and financial management including five
years with KPMG Peat Marwick LLP.

CHRISTINE M. LUCHI has served as Vice President of Operations of the Company
since 1996. Ms. Luchi joined the Company in 1990 as a Regional Manager. From
1992 until 1996, Ms. Luchi served as Director of Operations. Prior to joining
the Company, Ms. Luchi held retail positions with General Host Corporation,
where she served as training manager and district sales manager, and Tenneco
Corporation, where she held the positions of district and division manager and
franchise consultant. Ms. Luchi has additional consulting experience in the
areas of operations and sales training.

RICHARD B. CALLEN has served as Secretary and a Director of the Company
since 1969. Mr. Callen is a partner in the law firm of Darweesh, Callen, Lewis
& VonDohlen, which is legal counsel to the Company. See "Certain Relationships
and Related Transactions."

THOMAS A. JAMES has served as a Director of the Company since 1992. Since
1969, Mr. James has served as the chairman of the board of directors and chief
executive officer of both Raymond James & Associates, Inc., one of the
underwriters in this Offering, and its parent company, Raymond James
Financial, Inc. Mr. James also serves as a director of Arbor Health Care, Inc.
and IMCO Recycling, Inc. See "Certain Relationships and Related Transactions."

THOMAS J. SCANLON has served as a Director of the Company since December,
1996. Mr. Scanlon is administrative vice president of Manufacturers and
Traders Trust Company, a Buffalo, New York based

26
<PAGE>

commercial bank ("M&T Bank"), and has been an officer of M&T Bank since 1991.
Since 1993, Mr. Scanlon has served as president of M&T Capital Corporation, an
investment company specializing in venture capital investments ("M&T Capital")
and a wholly owned subsidiary of M&T Bank.

PAUL H. THOMPSON has served as Merchandising Manager of the Company since
1993. He joined the Company in 1990 as a store manager. From 1991 until 1993,
Mr. Thompson served as an Area Supervisor.

KATHRYN A. BULL has served as Regional Manager of the Company since 1996.
She joined the Company in 1995 as a District Manager. Ms. Bull has 20 years of
retail experience, including multi-unit supervision and project coordination
with London Fog, Jockey International and the Limited Group.

ALDEN B. CHEVLEN has served as the Company's Director of Leasing since 1996.
Prior to joining the Company, Mr. Chevlen served as assistant director of
leasing for American Greetings Corporation from 1990 to 1996. Mr. Chevlen, who
is also an attorney, served as a corporate senior staff attorney for the
Edward J. DeBartolo Corporation from 1983 to 1989.

RUSSELL E. ELIASON has served as Controller of the Company since 1996. He
joined the Company in 1993 as Assistant Controller. Prior to joining the
Company Mr. Eliason held the position of manager of general accounting and
financial reporting for a discount drug store division of Melville
Corporation.

JASON E. TORCHIA has served as MIS Manager of the Company since 1996. He
joined the Company in 1995 as a computer programmer analyst and was later
promoted to senior programmer analyst. Prior to joining the Company, Mr.
Torchia held various computer programmer positions with a catalog and retail
pet supply operation.

PETER A. RODEN has served as Warehouse Manager of the Company since 1985. He
joined the Company in 1976 in the shipping department.

The Company's Restated Certificate of Incorporation provides for a Board of
Directors of between three and twelve directors, and the number of directors
is currently four. Under the terms of the Company's Restated Certificate of
Incorporation and Bylaws, the Board of Directors is composed of three classes
of similar size, each elected in a different year, so that only approximately
one-third of the Board of Directors is elected in any single year. Mr. Klaucke
is in a class elected for a term expiring in 2000 and until his successor is
elected and qualified; Mr. Callen and Mr. James are in a class elected for a
term expiring in 1999 and until their successors are elected and qualified;
and Mr. Scanlon is in a class elected for a term expiring in 1998 and until
his successor is elected and qualified. Mr. James and Mr. Scanlon have been
nominated as directors pursuant to certain agreements by which the Company is
bound.

The Company has been informed by Mr. Scanlon that M&T Capital has not been
actively involved in investment activities within the last three years and its
shares of Common Stock of the Company are one of its few remaining significant
assets. Mr. Scanlon has informed the Company that, because he is serving as a
director pursuant to agreements related to M&T Capital's ownership of shares
of Common Stock of the Company, all of which shares, other than 40,000 shares
that are subject to the Underwriters' over-allotment option, are being sold in
the Offering, it is his intent to resign as a director of the Company upon the
expiration of his present term in 1998, or earlier if a successor is
identified by the Company. Mr. James has also indicated his intention to
resign as a director of the Company upon the expiration of his present term in
1999, or earlier if a successor is identified by the Company. The Company is
presently seeking to identify at least one additional independent director
with experience in the retailing industry.

The Board of Directors of the Company has an Audit Committee consisting of
three members (Messrs. Klaucke, Scanlon and James). The purpose of the Audit
Committee is to review the results of operations of the Company with officers
of the Company who are responsible for accounting matters and, from time to
time, with the Company's independent auditors. Following the completion of the
Offering, the Company expects to establish a Compensation Committee. The
Compensation Committee will recommend annual compensation

27
<PAGE>

arrangements for the Company's executive officers and will review annual
compensation arrangements for all other officers and significant employees.
There are no family relationships among the directors and officers of the
Company.

DIRECTOR COMPENSATION

Members of the Board of Directors of the Company are reimbursed for their
expenses incurred in connection with attending any meeting. In addition,
directors of the Company are eligible for the grant of options pursuant to the
1993 Employee Stock Option Plan of the Company. Messrs. Callen and James have
each been granted an option to purchase 10,000 shares of Common Stock, which
options are exercisable at any time prior to their expiration in 2004.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation paid or accrued by the Company for services in all capacities to
the Company's Chief Executive Officer and its other two Executive Officers who
earned more than $100,000 from the Company in fiscal 1996 (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
--------------------------------------------
NAME AND PRINCIPAL SALARY BONUS SECURITIES UNDERLYING
POSITION FISCAL YEAR ($) ($)(2) OPTIONS/SARS
- ------------------ ----------- ----------- --------------------------------
<S> <C> <C> <C> <C>
Fred H. Klaucke......... 1996 $ 178,365 $ 75,000 --
Chairman of the Board
of Directors,
President and Chief
Executive Officer
Charles A. Callahan..... 1996 $ 90,193 $ 27,058 25,000
Vice President of
Finance, Chief
Financial Officer and
Assistant Secretary
Christine M. Luchi...... 1996 $ 77,270 $ 23,181 25,000
Vice President of Oper-
ations
</TABLE>
- --------
(1) No Named Executive Officer received other annual compensation in excess of
the lesser of $50,000 or 10% of his or her salary and bonus.
(2) Amounts in this column include bonuses earned under an employment
agreement in the case of Mr. Klaucke, and discretionary performance-based
bonuses in the case of the other Named Executive Officers.

28
<PAGE>

The following table sets forth information concerning stock option grants
made during fiscal 1996 to the executive officers named in the Summary
Compensation Table above. The Company has not granted any stock appreciation
rights.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE)(3) DATE 5% 10%
- ---- ------------- -------------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Fred H. Klaucke......... 0 -- -- -- -- --
Charles A. Callahan..... 25,000 22.7% $2.50 August 5, 2006 $ 170,000 $ 291,000
Christine M. Luchi...... 25,000 22.7% $2.50 August 5, 2006 $ 170,000 $ 291,000
</TABLE>
- --------
(1) Options granted are exercisable at the rate of 20% upon date of grant and
an additional 20% on each anniversary date thereafter.
(2) Based on an aggregate of 110,000 shares subject to options granted to
employees of the Company in fiscal 1996.
(3) The exercise price per share of the options granted was equal to the fair
market value of the Common Stock on the date of grant, as determined by
the Board of Directors.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date, and are not intended to forecast possible future
appreciation, if any, in the price of the Company's Common Stock. The
gains shown are net of the option exercise price, but do not include
deductions for federal or state income taxes or other expenses associated
with the exercise of the options or the sale of the underlying shares. The
actual gains, if any, on the stock option exercises will depend on the
future performance of the Common Stock, the option holder's continued
employment through the option period and the date on which the options are
exercised.

The following table sets forth information concerning the number of
unexercised options and the fiscal 1996 year-end value of unexercised options
on an aggregated basis held by each of the Named Executive Officers. The
Company has not granted any stock appreciation rights and no options were
exercised in fiscal 1996.

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

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Fred H. Klaucke............. 15,000 0 $60,300 $ 0
Charles A. Callahan......... 15,000 20,000 $59,500 $70,000
Christine M. Luchi.......... 15,000 20,000 $59,500 $70,000
</TABLE>
- --------

(1) There was no public trading market for the Common Stock at the end of
fiscal 1996. Accordingly, as permitted by the rules of the Securities and
Exchange Commission, these values have been calculated on the basis of the
initial public offering price less the exercise price payable for such
shares.

29
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company currently has no separate compensation or stock option committee
or other board committee performing equivalent functions. These functions have
been performed by the Company's Board of Directors, which includes one full
time employee of the Company.

EMPLOYMENT AGREEMENT

The Company has entered into an Employment Agreement with Fred Klaucke
pursuant to which Mr. Klaucke serves as the Chairman of the Board of Directors
and Chief Executive Officer of the Company and receives an annual salary of
$175,000. Mr. Klaucke is also entitled to an annual bonus of up to $75,000.
The amount of the bonus is determined based upon the Company's operating
profit as compared with its budget projections. The Agreement also provides
that, in the event Mr. Klaucke's employment is terminated by him for "good
reason" or in the event of a "change in control" of the Company, Mr. Klaucke
shall be paid: (i) his full base salary through the date of termination plus
any current bonus entitlements; (ii) a lump sum payment equal to the greater
of $250,000 or the amount of salary that would have been paid to Mr. Klaucke
from the date of termination to the end of the term of the Agreement; and
(iii) in lieu of shares of Common Stock issuable upon the exercise of stock
options exercisable on the date of such termination or change in control, the
difference in cash between the closing price of a share of Common Stock as
reported on any organized stock exchange on such date and the per share
exercise price of each option to buy a share of Common Stock held by Mr.
Klaucke on such date. In addition, under the Employment Agreement, the
termination of Mr. Klaucke's employment by him for good reason or the
occurrence of a change of control entitles Mr. Klaucke to continue
participation in certain benefits plans and the payment of any legal fees and
expenses incurred by Mr. Klaucke in enforcing his rights under the Agreement
or disputing any termination or change of control. A change in control is
generally defined to include the acquisition by a person or entity, or persons
or entities acting as a group, of beneficial ownership of 25% or more of the
outstanding shares of the Company, certain changes in the majority membership
of the Board of Directors, and sales of all or substantially all of the assets
of the Company. While applicable law does not quantify a sale of all or
substantially all of the assets, such a sale would generally involve a sale
made outside the usual or regular course of business and involving disposition
of the assets essential to the business actually conducted by the Company.
Termination by Mr. Klaucke of his employment for good reason is generally
defined to include his removal as an officer of the Company, the assignment of
duties inconsistent with his position, a reduction in his base salary, the
relocation outside the Rochester area, and the failure by the Company to
obtain assumption of the Agreement by any successor in interest to the
Company. The initial term of the Agreement expires on January 31, 1998 and the
Agreement automatically renews for additional two-year terms, unless
terminated by either party on 60 days notice prior to the expiration of any
renewal term.

STOCK OPTION PLANS

The Company has adopted two stock option plans, the 1993 Employee Stock
Option Plan and the 1989 Stock Option Plan (collectively, the "Stock Option
Plans"). An aggregate of 565,000 shares of Common Stock are reserved for
issuance under the Stock Option Plans. The purposes of the Stock Option Plans
are to enable the Company to attract and retain qualified persons to serve as
directors, employees, consultants and advisors, and to align the interests of
such persons with the interests of stockholders by giving them a personal
interest in the value of the Common Stock. Options granted under the Stock
Option Plans may either be options that are intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code
or options that are not intended to so qualify ("Nonstatutory Options").
Options granted to members of the Board of Directors who are not also
employees of the Company will be Nonstatutory Options. Stock appreciation
rights may be granted in connection with Nonstatutory Options. Such rights are
exercisable by the optionee at any time a related Nonstatutory Option could be
exercised, and are payable, at the discretion of the Board of Directors, in
cash, shares of Common Stock or any combination thereof. The exercise of a
stock appreciation right results in the cancellation of the related
Nonstatutory Option. No stock appreciation rights have been granted under the
Stock Option Plans.

As of the date of this Prospectus, there were outstanding options to
purchase 165,000 shares of Common Stock at a weighted average price of $2.50
per share, 87,000 of which are presently exercisable. Each of the key
employees listed under "Management" has been granted stock options under the
Company's Stock Option Plans.

30
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company in the normal course of business has retained the law firm of
Darweesh, Callen, Lewis & VonDohlen, of which Mr. Richard Callen is a partner,
for legal services and expects to do so during the current year.

Raymond James & Associates, Inc. is acting as one of the managing
underwriters in the Offering. See "Underwriting." Thomas James, a Director of
the Company, is the chairman and chief executive officer of Raymond James &
Associates, Inc. and Raymond James Financial, Inc., the parent company of that
firm. See "Principal and Selling Stockholders." Certain shares of Common Stock
beneficially owned by Mr. James are subject to certain registration rights
under the Securities Act at the Company's expense, except for incremental
underwriting discounts and commissions, stock transfer taxes, if any, on the
shares sold and fees and disbursements of any separate legal counsel; certain
indemnities; certain rights of first refusal in connection with certain
proposed issuances of capital stock; and certain rights of co-sale in
connection with proposed sales of Common Stock by certain stockholders,
including Mr. Fred Klaucke. The agreement pursuant to which the foregoing
rights were granted terminates as of the closing of the Offering. Mr. James is
also a party to a voting agreement with Fred Klaucke and the former President
of the Company, pursuant to which Mr. Klaucke and the former President agreed
to vote their shares of Common Stock of the Company for the election of Mr.
James as a Director of the Company, in consideration of Mr. James agreement to
vote his shares of Common Stock of the Company for the election of Fred
Klaucke, Richard Callen and the former President as Directors of the Company.
The obligations of Mr. Klaucke and the former President of the Company under
this agreement cease in the event Mr. James's total share holdings are reduced
by an amount equal to 80% or more of his current holdings. See "Principal and
Selling Stockholders." This voting agreement terminates upon the closing of
the Offering.

In December of 1992, the Company entered into a Stock Purchase Agreement
with M&T Capital, of which Mr. Thomas Scanlon, a Director of the Company, is
President. That agreement, among other things, provides M&T Capital certain
registration rights under the Securities Act at the Company's expense, except
for incremental underwriting discounts and commissions, stock transfer taxes,
if any, on the shares sold and fees and disbursements of any separate legal
counsel; certain indemnities; certain rights of first refusal in connection
with certain proposed issuances of capital stock; and certain rights of co-
sale in connection with proposed sales of Common Stock by certain
stockholders, including Mr. Fred Klaucke. Under this Agreement, the Company is
also obligated to nominate a representative of M&T Capital for election as a
Director of the Company. This right terminates at such time as M&T Capital's
stock holdings are reduced by an amount equal to 80% or more of its current
holdings, and will in any event terminate as of the closing of the Offering.
M&T Capital is also a party to the Voting Agreement, together with the
Company, Fred Klaucke, Richard Callen, Thomas James, and the former President
of the Company pursuant to which, each party to the Voting Agreement who is a
stockholder of the Company is obligated to vote all of the shares of Common
Stock of the Company held by him for the slate of nominees for director
proposed by the Company, which slate will include a person nominated by M&T
Capital. The terms of the Voting Agreement are binding upon any transferee of
the Common Stock held by a stockholder who is a party to the Agreement, except
a transferee in or after an initial public offering who is not an affiliate of
the Company or the transferring stockholder. This voting agreement terminates
upon the closing of the Offering.

The Company believes that the related party transactions described above are
on terms no less favorable than if the transactions were entered into with
unrelated parties.

31
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, and as adjusted to reflect the sale
of shares of Common Stock in the Offering (assuming no exercise of the
Underwriters' over-allotment option), by: (i) each of the Company's directors,
(ii) each of the Named Executive Officers, (iii) all directors and executive
officers as a group, (iv) each person known by the Company to own beneficially
more than 5% of the Common Stock and (v) each Selling Stockholder. Except as
set forth below, the business address of each Selling Stockholder beneficially
owning more than 5% of the Common Stock is c/o the Company at 900 Jefferson
Road, Building Four, Rochester, New York 14623. Except as indicated in the
footnotes to the table, none of the Selling Stockholders has held any position
or office or had any other material relationship with the Company within the
past three years.

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO BE SOLD OWNED AFTER
TO THE OFFERING IN THE OFFERING THE OFFERING
------------------- --------------- -------------------
DIRECTORS, EXECUTIVE % OF OUT- % OF OUT-
OFFICERS AND 5% NUMBER STANDING NUMBER NUMBER STANDING
STOCKHOLDERS OF SHARES SHARES OF SHARES OF SHARES SHARES
- -------------------- --------- --------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Fred H.
Klaucke(1)(2)(3)....... 1,522,140 44.0% -- 1,522,140 30.2%
Thomas A. James(2)(4)... 222,890 6.5% 13,890(5) 209,000 4.2%
Richard B.
Callen(2)(6)........... 44,335 1.3% -- 44,335 *
Thomas J. Scanlon(2).... -- -- -- -- --
Charles A. Calla-
han(1)(7).............. 30,855 * -- 30,855 *
Christine M.
Luchi(1)(8)............ 34,500 1.0% -- 34,500 *
All executive officers
and directors as a
group (6 persons)(9)... 1,854,720 53.0% 13,890 1,840,830 36.2%
M&T Capital Corpora-
tion(10)............... 555,555 16.2% 515,555 40,000 *
<CAPTION>
OTHER SELLING
STOCKHOLDERS
- -------------
<S> <C> <C> <C> <C> <C>
B&J Management Corpora-
tion................... 12,500 * 12,500 -- --
Robert Brody............ 15,000 * 2,555 12,445 *
Todd Callen............. 1,665 * 1,665 -- --
Franklin Crowder & Susan
Allport................ 27,500 * 10,000 17,500 *
Gaston V. DiBello....... 5,000 * 1,275 3,725 *
Robert DiRomualdo....... 25,000 * 25,000 -- --
Robert G. Fisher........ 30,000 * 12,745 17,255 *
Frank Fleischer......... 3,750 * 960 2,790 *
John & Iva Ann Francis.. 18,750 * 4,465 14,285 *
James Froehler(11)...... 11,900 * 11,900 -- --
Andrew Glanz............ 5,000 * 5,000 -- --
Elliot Glanz............ 15,000 * 5,000 10,000 *
Benjamin A. Goldman
Trust.................. 10,000 * 5,000 5,000 *
Margot A. Green......... 13,890 * 2,780 11,110 *
Harbus Investors,
Inc. .................. 13,890 * 13,890 -- --
Jefferson Harkins....... 10,000 * 10,000 -- --
Larry & Molly Harris.... 5,000 * 5,000 -- --
Donna Hodak............. 2,500 * 1,275 1,225 *
Pamela K. Hodak......... 2,500 * 1,275 1,225 *
Tony Hodak.............. 2,500 * 1,275 1,225 *
Jeffrey Huenink......... 10,000 * 10,000 -- --
</TABLE>

32
<PAGE>

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO BE SOLD OWNED AFTER
TO THE OFFERING IN THE OFFERING THE OFFERING
------------------- --------------- -------------------
% OF OUT- % OF OUT-
OTHER SELLING NUMBER STANDING NUMBER NUMBER STANDING
STOCKHOLDERS OF SHARES SHARES OF SHARES OF SHARES SHARES
- ------------- --------- --------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
R.K. Johnson............ 18,500 * 4,250 14,250 *
Allan Katz.............. 10,000 * 10,000 -- --
Lincoln Kinnicutt....... 18,500 * 9,435 9,065 *
Harley Kushel........... 2,500 * 255 2,245 *
L. Wayne LeRoux......... 10,000 * 10,000 -- --
Dorothy Livadas......... 6,000 * 3,060 2,940 *
Joseph E. Lundy......... 10,000 * 2,000 8,000 *
David A. Metzger........ 20,000 * 6,600 13,400 *
Frederick W. Metzger.... 153,000 4.5% 20,000 133,000 2.6%
Henry N. Metzger........ 40,700 1.2% 16,200 24,500 *
Gabriel S. Miller
Trust.................. 18,750 * 10,000 8,750 *
Marc H. Miller Trust.... 18,750 * 10,000 8,750 *
Ronald L. Miller, as
Settler under Declara-
tion of Trust.......... 71,250 2.1% 18,165 53,085 1.1%
Sheila L. Miller........ 10,000 * 10,000 -- --
Michael & Junia
Milvain................ 10,000 * 7,000 3,000 *
Alton R. Neal........... 8,500 * 4,330 4,170 *
Marvin A. Posner........ 5,000 * 5,000 -- --
William J. Schifino..... 8,750 * 3,315 5,435 *
1770-1780 East Ridge
Road, Inc. ............ 37,930 1.1% 6,445 31,485 *
Edith Sherdlower........ 10,000 * 10,000 -- --
Sheila Szewczuk......... 2,500 * 1,275 1,225 *
John P. Uphoff, Trust-
ee..................... 11,000 * 2,555 8,445 *
Linda Winton............ 15,000 * 15,000 -- --
Joan N. Witzel.......... 5,000 * 2,000 3,000 *
Robert F. Witzel........ 10,000 * 4,000 6,000 *
</TABLE>
- --------
* Less than 1%
(1) Named Executive Officers of the Company
(2) Directors of the Company

(3) Includes 15,000 shares subject to currently exercisable stock options. Of
the shares owned by Mr. Klaucke 237,140 shares are owned jointly with his
spouse.
(4) Includes 199,000 shares held by trusts of which Mr. James is the sole
trustee and 13,890 shares held by Harbus Investors, Inc., in which Mr.
James holds an economic interest. Includes 10,000 shares subject to
currently exercisable stock options. Mr. James's business address is:
Raymond James Financial, Inc., 880 Carillon Parkway, St. Petersburg,
Florida 33716.
(5) The 13,890 shares to be sold consist of the shares owned by Harbus
Investors, Inc.
(6) Includes 10,000 shares subject to currently exercisable stock options and
18,335 shares held by a bank as custodian for Mr. Callen's IRA Account.
Also includes 6,000 shares held in trust by an individual trustee, as to
which Mr. Callen has reported to the Company that he is the beneficial
owner.
(7) Includes 20,000 shares subject to currently exercisable stock options.
(8) Includes 20,000 shares subject to currently exercisable stock options.
(9) Includes shares subject to currently exercisable stock options.

(10) M&T Capital's business address is: Attention: Thomas J. Scanlon, One
Fountain Plaza, 9th Floor, Buffalo, New York 14203. M&T Capital is a
party to certain agreements with the Company. See "Certain Relationships
and Related Transactions." The 40,000 shares owned after the Offering are
subject to the Underwriters' over-allotment option.
(11) Mr. Froehler served as President of the Company from September 1990 until
January 1996 and as a director of the Company from September 1990 to
April 1996.

33
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 10,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock") and 5,000,000
shares of Preferred Stock of the Company, par value $.01 per share (the
"Preferred Stock"). As of the date of this Prospectus there were 3,422,955
shares of Common Stock outstanding held of record by 82 stockholders and no
shares of Preferred Stock outstanding. The following description is a summary
and is subject to and qualified in its entirety by reference to the provisions
of the Restated Certificate of Incorporation filed as an exhibit to the
Registration Statement of which this Prospectus is a part.

COMMON STOCK

Voting Rights. Each holder of Common Stock is entitled to one vote for each
share owned of record on all matters voted upon by stockholders, and do not
have cumulative voting rights.

Dividends. Holders of Common Stock are entitled to receive dividends if, as
and when declared by the Board of Directors out of funds legally available
therefor, subject to the dividend and liquidation rights of any Preferred
Stock that may be issued and outstanding. Under the New York Business
Corporation Law ("BCL") no dividend or other distribution (including
redemptions or repurchases of shares of capital stock) may be made if after
giving effect to such distribution, the Company would not be able to pay its
debts as they become due in the usual course of business, or the Company's
total assets would be less than the sum of its total liabilities plus the
amount that would be needed at the time of a liquidation to satisfy the
preferential rights of any holders of Preferred Stock. See "Dividend Policy."

Liquidation. In the event of a liquidation, dissolution or winding-up of the
Company, the holders of Common Stock are entitled to share equally and ratably
in the assets of the Company, if any, remaining after the payment of all debts
and liabilities of the Company and the liquidation preference of any
outstanding Preferred Stock.

Other Provisions. The Common Stock has no preemptive rights, no cumulative
voting rights and no redemption, sinking fund or conversion provisions. The
shares of Common Stock offered hereby, when issued, will be fully paid and
non-assessable.

Transfer Agent and Registrar. The transfer agent and registrar for the
Common Stock is American Stock Transfer & Trust Company.

Listing. The Company's Common Stock has been approved for listing on the
Nasdaq National Market under the trading symbol "WOSI."

PREFERRED STOCK

The Board of Directors of the Company is authorized, without further
stockholder action, but subject to any limitations prescribed by the BCL or
the rules of the Nasdaq National Market or other organizations on whose
systems stock of the Company may be traded or listed, to divide any or all
shares of the authorized Preferred Stock into series and to fix and determine
the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereon, of
any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. As of
the date of this Prospectus, the Board of Directors has not authorized the
issuance of any shares of Preferred Stock and there are no definitive plans,
agreements or understandings for the authorization or issuance of any shares
of Preferred Stock.

CERTAIN ANTI-TAKEOVER PROVISIONS

Provisions Under the Certificate and By-Laws

The Restated Certificate of Incorporation and the By-Laws of the Company
contain certain provisions that could make the acquisition of the Company by
means of a tender offer, a proxy contest or otherwise difficult.

34
<PAGE>

These provisions are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of the Company to negotiate first with the Company's Board of
Directors. The Company believes that the benefits of these provisions outweigh
the potential disadvantages of discouraging such change of control proposals
because, among other things, negotiation of such change of control proposals
might result in an improvement of their terms. The description set forth below
is intended as a summary only and is qualified in its entirety by reference to
the Restated Certificate of Incorporation and the By-Laws of the Company,
which have been filed as exhibits to the Company's Registration Statement of
which this Prospectus is a part.

Staggered Board of Directors. The Restated Certificate of Incorporation and
the By-Laws of the Company provide that the Board of Directors will be divided
into three classes of directors, each class constituting one-third of the
total number of directors and with the classes serving staggered three-year
terms beginning in 1997. The classification of the directors will have the
effect of making it more difficult for stockholders, including those holding a
majority of the outstanding shares, to force an immediate change in the
composition of the Board of Directors.

Preferred Stock. Depending upon the rights of the Preferred Stock, the
issuance of Preferred Stock could have an adverse effect on holders of Common
Stock by delaying or preventing a change in control of the Company, making
removal of the present management of the Company more difficult or resulting
in restrictions upon the payment of dividends and other distributions to the
holders of Common Stock.

Removal of Directors and Filling of Vacancies. The Restated Certificate of
Incorporation provides that a director of the Company may be removed only for
cause and only by action of the board or upon the affirmative vote of the
holders of 75% of the securities entitled to vote an election of directors.
Newly created directorships and board of director vacancies resulting from
death, removal or other causes may be filled only by a majority vote of the
then remaining directors. Accordingly, it will be more difficult for
stockholders, including those holding the majority of the outstanding shares,
to force an immediate change in the composition of the Board of Directors.

Special Meetings of Stockholders. The Bylaws of the Company provide that
special meetings of stockholders of the Company may be called only by the
Chairman, the President, a majority of the members of the Board of Directors
or by the holders of 75% of the outstanding stock entitled to vote on an issue
proposed to be considered at the special meeting.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws establish an advance notice procedure for the
nomination, other than by or at the direction of the Board of Directors or
committee thereof, of candidates for election as director as well as for other
stockholder proposals to be considered at stockholder's meetings.

Section 912 of the New York Business Corporation Law

Upon consummation of the Offering, the Company will be subject to the
provisions of Section 912 of the BCL (the "Anti-takeover Law") regulating
corporate takeovers. The Anti-takeover Law prevents certain New York
corporations, including those whose securities are quoted on the Nasdaq
National Market, from engaging, under certain circumstances, in a "business
combination" (which includes a merger or sale of more than 10% of the
corporation's assets) with an "interested shareholder" (a shareholder who is
the owner of, or is an affiliate or associate of the corporation and at any
time within the prior five years did own 20% or more of the corporation's
outstanding voting stock) for five years following the date that such
shareholder became an "interested shareholder," unless the "business
combination" or the purchase of stock by the "interested shareholder" is
approved by the board of directors of such corporation before the "interested
shareholder" becomes an "interested shareholder."

35
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding 5,022,955
shares of Common Stock (5,350,455 shares if the Underwriters' over-allotment
option is exercised in full). Of these shares, the 2,450,000 shares sold in
the Offering will be immediately eligible for resale in the public market
without restriction under the Securities Act, except for any shares purchased
by an "Affiliate" (as that term is defined under the Securities Act) of the
Company, which will be subject to the resale limitations of Rule 144 under the
Securities Act. The remaining 2,572,955 shares of Common Stock outstanding
following the Offering (the "Previously Issued Shares") may be publicly sold
in accordance with an applicable exemption from registration, such as those
provided by Rule 144 promulgated under the Securities Act.

In general, under Rule 144, beginning 90 days after the date of this
Prospectus, an Affiliate of the Company or other person (or persons whose
shares are aggregated) who has beneficially owned Previously Issued Shares for
at least one year, will be entitled to sell in any three-month period a number
of shares that does not exceed the greater of (i) 1% of the then outstanding
shares of the Company's Common Stock (approximately 54,130 shares immediately
after the Offering, if the Underwriters' over-allotment option is exercised in
full) or (ii) the average weekly trading volume of the Company's Common Stock
on the Nasdaq National Market during the four calendar weeks immediately
preceding the date on which notice of the sale is filed with the Securities
and Exchange Commission. Sales pursuant to Rule 144 are subject to certain
requirements relating to manner of sale, notice and availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not deemed to have been an Affiliate of the Company at any
time during the 90 days immediately preceding the sale and who has
beneficially owned "Restricted Securities" (as that term is defined under Rule
144) for at least two years is entitled to sell such shares pursuant to Rule
144(k) without regard to the limitations described above.

The holders of 2,283,360 Previously Issued Shares, including all Executive
Officers and Directors, have entered into agreements with the representatives
of the Underwriters ("Lock-up Agreements") pursuant to which they have agreed
that they will not, in the case of 2,243,360 Previously Issued Shares during
the 180-day period after the date of this Prospectus and, in the case of
40,000 Previously Issued Shares during the 365-day period after the date of
this Prospectus, directly or indirectly offer for sale, sell, contract to sell
or otherwise dispose of any shares of Common Stock, any securities
exchangeable for Common Stock or rights to acquire such shares, or request the
registration for the offer or sale of any of the foregoing, except with the
prior consent of A.G. Edwards & Sons, Inc. In addition, the Company has agreed
that during such period it will not, without the prior consent of A.G. Edwards
& Sons, Inc., directly or indirectly offer for sale, sell, contract to sell or
otherwise dispose of any shares of Common Stock, any securities exchangeable
for Common Stock or any other rights to acquire such shares. See
"Underwriting." At the expiration of such lock-up period all of the Previously
Issued Shares will be eligible for sale in the open market pursuant to Rule
144(k), subject in the case of shares held by affiliates of the Company to the
volume and manner of sale limitations of Rule 144.

Previously Issued Shares may also be resold (i) to a person whom the seller
reasonably believes is a qualified institutional buyer within the meaning of
Rule 144A under the Securities Act purchasing for its own account or for the
account of a qualified institutional buyer in a transaction meeting the
requirements of Rule 144A and (ii) in an offshore transaction complying with
Rules 903 or 904 of Regulation S under the Securities Act.

An employee of the Company who purchased shares or was awarded options to
purchase shares pursuant to a written compensatory plan or contract meeting
the requirements of Rule 701 under the Securities Act is entitled to rely on
the resale provisions of Rule 701 under the Securities Act which permits
Affiliates and non-Affiliates to sell their Rule 701 shares without having to
comply with the holding period restrictions of Rule 144, in each case
commencing 90 days after the date of this Prospectus. In addition, non-
Affiliates may sell Rule 701 shares without complying with the public
information, volume and notice provisions of Rule 144.

36
<PAGE>

Following the effectiveness of the registration statement covering the
shares of Common Stock offered hereby, the Company will register under the
Securities Act 565,000 shares of Common Stock reserved for issuance upon the
exercise of stock options granted or to be granted under the Company's stock
option plans. The Company expects to file a registration statement on Form S-8
to register these shares approximately 90 days after completion of the
Offering and expects that this registration will automatically become
effective upon filing. Accordingly, shares registered under such registration
statement and acquired pursuant to the Plan will be available for sale in the
open market upon the expiration of the public sale restrictions described
below (see "Underwriting"), subject to Rule 144 volume limitations applicable
to Affiliates, except to the extent such shares are subject to vesting
restrictions with the Company. As of the date of this Prospectus, there were
options to purchase 165,000 shares of Common Stock for prices ranging from
$1.80 to $3.00 per share, outstanding under the Company's Stock Option Plans
(including options to acquire 105,000 shares granted to Executive Officers and
Directors that are subject to the Lock-up Agreements described above) 87,000
of which are currently exercisable (including options to acquire 75,000 shares
that are subject to the Lock-up Agreements). See "Management--Stock Option
Plans."

Prior to the Offering, there has been no public market for the Common Stock
of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect market prices prevailing from time to
time. Sales of substantial amounts of Common Stock of the Company in the
public market after the restrictions lapse could adversely affect the
prevailing market price and the ability of the Company to raise equity capital
in the future.

37
<PAGE>

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement among the
Company, the Selling Stockholders, and the underwriters listed below (the
"Underwriters"), for whom A.G. Edwards & Sons, Inc. and Raymond James &
Associates, Inc. are acting as representatives (the "Representatives"), the
Underwriters have severally agreed to purchase from the Company and the
Selling Stockholders the aggregate number of shares of the Company's Common
Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------
<S> <C>
A.G. Edwards & Sons, Inc.............................................. 815,000
Raymond James & Associates, Inc....................................... 815,000
Alex. Brown & Sons Incorporated....................................... 49,000
Credit Lyonnais Securities (USA) Inc. ................................ 49,000
Dillon, Read & Co. Inc. .............................................. 49,000
Donaldson, Lufkin & Jenrette Securities............................... 49,000
Lehman Brothers....................................................... 49,000
Oppenheimer & Co. Inc. ............................................... 49,000
PaineWebber Incorporated.............................................. 49,000
Prudential Securities Incorporated.................................... 49,000
Advest Inc. .......................................................... 24,500
Fahnestock & Co. Inc. ................................................ 24,500
First Albany Corporation.............................................. 24,500
First of Michigan Corp. .............................................. 24,500
Hanifen, Imhoff Inc. ................................................. 24,500
Janney Montgomery Scott Inc. ......................................... 24,500
Ladenburg Thalmann & Co. Inc. ........................................ 24,500
Legg Mason Wood Walker Inc. .......................................... 24,500
McDonald & Co. Securities Inc. ....................................... 24,500
Mesirow Financial Inc. ............................................... 24,500
Morgan Keegan & Co. Inc. ............................................. 24,500
Needham & Co. ........................................................ 24,500
Neuberger Berman, LLC................................................. 24,500
Pennsylvania Merchant Group Ltd. ..................................... 24,500
Tucker Anthony Inc. .................................................. 24,500
Wheat First Securities................................................ 24,500
C.L. King & Associates, Inc. ......................................... 12,000
Starr Securities Inc. ................................................ 12,000
Van Kasper & Co. ..................................................... 12,000
Total............................................................. 2,450,000
=========
</TABLE>

Pursuant to the terms of the Underwriting Agreement, the Underwriters will
acquire the shares of Common Stock offered hereby from the Company and the
Selling Stockholders at the public offering price set forth on the cover page
hereof less the underwriting discounts and commissions set forth on the cover
page. The Underwriters propose to offer the shares to the public at the public
offering price set forth on the cover page. Some of the shares offered to the
public will be sold to certain dealers at the public offering price less a
dealers' concession not in excess of $.24 per share. The Underwriters and such
dealers may allow a discount not in excess of $.10 per share to other dealers.
After the shares are released for sale to the public, the public offering
price and other terms may be varied by the Representatives.

The nature of the obligations of the Underwriters is such that if any of the
shares offered hereby are purchased, all of such shares must be purchased.

38
<PAGE>

The Company and a Selling Stockholder have granted to the Underwriters an
option for 45 days to purchase (at the public offering price less the
underwriting discounts and commissions shown on the cover page of this
Prospectus) up to 367,500 shares from them. In the event the Underwriters
elect to exercise their option, 40,000 shares will first come from the Selling
Stockholder and the balance, if any, up to 327,500 shares will come from the
Company. The Underwriters may exercise such option only to cover over-
allotments of shares made in connection with the sale of the shares offered
hereby. To the extent the Underwriters exercise such option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage of the option shares that the
number of shares of Common Stock to be purchased by it shown in the above
table bears to 2,450,000, and the Company will be obligated, pursuant to the
option, to sell such shares to the Underwriters.

Mr. Thomas James, who is a Director of the Company and the beneficial owner
of shares of Common Stock of the Company, is also the chairman of the board of
directors and chief executive officer of Raymond James & Associates, Inc., a
Representative in this Offering, and Raymond James Financial, Inc., its parent
company.

The Company and holders of 2,283,360 Previously Issued Shares, including all
Executive Officers and Directors, have entered into Lock-up Agreements
pursuant to which they have agreed that they will not, in the case of
2,243,360 Previously Issued Shares during the 180-day period after the date of
this Prospectus and, in the case of 40,000 Previously Issued Shares during the
365-day period after the date of this Prospectus, directly or indirectly offer
for sale, sell, contract to sell, or otherwise dispose of, any shares of
Common Stock, any securities exchangeable for the Common Stock or any other
rights to acquire such shares or, in the case of holders of shares, request
the registration for the offer or sale of any of the foregoing (other than
shares offered hereby), without the prior written consent of A.G. Edwards &
Sons, Inc.

Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price of the shares of Common Stock has been
negotiated among the Company and the Representatives. In addition to
prevailing market conditions, among the factors that were considered in
determining the initial public offering price of the shares of Common Stock
were the Company's historical financial performance, estimates of the business
potential and earning prospects of the Company, an assessment of the Company's
management and the consideration of the above factors in relation to the
market valuations of companies in similar business.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M under the Securities Exchange Act of
1934, pursuant to which such persons may bid for or purchase Common Stock for
the purpose of stabilizing its market price. The Underwriters also may create
a short position for the account of the Underwriters by selling more Common
Stock in connection with the Offering than they are committed to purchase from
the Company and the Selling Stockholders, and in such case may purchase Common
Stock in the open market following completion of the Offering to cover all or
a portion of such short position. The Underwriters may also cover all or a
portion of such short position, up to 367,500 shares of Common Stock, by
exercising the Underwriters' over-allotment option referred to above. In
addition, A.G. Edwards & Sons, Inc., on behalf of the Underwriters, may impose
"penalty bids" under contractual arrangements with the Underwriters whereby it
may reclaim from an Underwriter (or dealer participating in the offering) for
the account of the other Underwriters, the selling concession with respect to
Common Stock that is distributed in the Offering but subsequently purchased
for the account of the Underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the Common Stock at a level above that which might otherwise prevail
in the open market. None of the transactions described in this paragraph is
required, and, if they are undertaken, they may be discontinued at any time.

The Representatives have advised the Company that they do not expect sales
to any accounts over which they exercise discretionary authority to exceed 5%
of the total number of shares of Common Stock offered hereby.

39
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Harris Beach & Wilcox
LLP, Rochester, New York. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Ropes & Gray, Boston,
Massachusetts. Ropes & Gray will rely on the opinion of Harris Beach & Wilcox
LLP with respect to certain matters of New York law.

EXPERTS

The financial statements of World of Science, Inc. as of February 1, 1997
and January 28, 1996 and for each of the years in the three-year period ended
February 1, 1997 have been included herein and in the Registration Statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.

AVAILABLE INFORMATION

This Prospectus constitutes a part of a Registration Statement on Form S-1
filed by the Company with the Commission under the Securities Act through the
Electronic Data Gathering and Retrieval ("EDGAR") system with respect to the
Common Stock offered hereby. This Prospectus omits certain of the information
contained in the Registration Statement and reference is hereby made to the
Registration Statement and related exhibits and schedules for further
information with respect to the Company and the Common Stock offered hereby.
The summaries contained in this Prospectus concerning information included in
the Registration Statement, or in any exhibits thereto, are qualified in their
entirety by reference to such information or exhibit. The Registration
Statement and the exhibits and schedules forming a part thereof can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Registration statements, reports, proxy and
information statements filed through the EDGAR system are publicly available
through the Commission's Internet web site at "http://www.sec.gov".

40
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Balance Sheets as of January 28, 1996, February 1, 1997 and May 3, 1997
(unaudited).............................................................. F-3
Statements of Operations for the years ended January 29, 1995, January 28,
1996 and February 1, 1997 and for the three months ended May 4, 1996 (un-
audited) and May 3, 1997 (unaudited)..................................... F-4
Statements of Stockholders' Equity for the years ended January 29, 1995,
January 28, 1996 and February 1, 1997 and for the three months ended May
3, 1997 (unaudited)...................................................... F-5
Statements of Cash Flows for the years ended January 29, 1995, January 28,
1996 and February 1, 1997 and for the three months ended May 4, 1996 (un-
audited) and May 3, 1997 (unaudited)..................................... F-6
Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
World of Science, Inc.:

We have audited the accompanying balance sheets of World of Science, Inc. as
of January 28, 1996 and February 1, 1997, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended February 1, 1997. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of World of Science, Inc. as
of January 28, 1996 and February 1, 1997, and the results of its operations
and its cash flows for each of the years in the three-year period ended
February 1, 1997, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Rochester, New York May 30, 1997

F-2
<PAGE>

WORLD OF SCIENCE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 1, MAY 3,
1996 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents................ $ 1,620,043 $ 2,014,253 $ 63,139
Accounts receivable...................... 65,494 54,339 228,385
Inventories.............................. 5,971,841 6,927,037 9,310,429
Prepaid expenses and other current as-
sets.................................... 249,701 386,181 635,706
Taxes receivable......................... -- -- 602,000
Deferred income taxes.................... 335,000 368,000 368,000
----------- ----------- -----------
Total current assets................... 8,242,079 9,749,810 11,207,659
Property, equipment and leasehold improve-
ments, net................................ 4,331,785 4,983,718 5,144,021
Deferred income taxes...................... 281,000 540,000 540,000
----------- ----------- -----------
$12,854,864 $15,273,528 16,891,680
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit........................... $ -- $ -- $ 2,665,000
Current installments of long-term debt... 64,243 69,161 182,114
Current installments of obligations under
capital leases.......................... 87,239 101,620 102,801
Accounts payable......................... 1,353,873 1,569,226 2,262,770
Accrued expenses......................... 672,656 636,304 460,556
Accrued sales taxes...................... 84,517 91,670 119,279
Income taxes payable..................... 1,007,099 1,463,427 89,146
----------- ----------- -----------
Total current liabilities.............. 3,269,627 3,931,408 5,881,666
Long-term debt, excluding current install-
ments..................................... 137,292 68,456 603,059
Obligations under capital leases, excluding
current installments...................... 148,314 130,399 104,250
Accrued occupancy expense.................. 555,102 662,890 689,628
----------- ----------- -----------
Total liabilities...................... 4,110,335 4,793,153 7,278,603
----------- ----------- -----------
Commitments and contingencies (notes 4, 6
and 8)
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 outstand-
ing 3,422,955 shares.................... 34,230 34,230 34,230
Additional paid-in capital............... 2,703,020 2,703,020 2,703,020
Retained earnings........................ 6,007,279 7,743,125 6,875,827
----------- ----------- -----------
Total stockholders' equity............. 8,744,529 10,480,375 9,613,077
----------- ----------- -----------
$12,854,864 $15,273,528 $16,891,680
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>

WORLD OF SCIENCE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
----------------------------------- ----------------------
JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1995 1996 1997 1996 1997
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............... $31,334,716 $37,265,071 $44,562,851 $5,561,532 $7,286,582
Cost of sales and occu-
pancy expenses......... 20,788,259 23,956,946 28,629,721 4,298,765 5,729,742
----------- ----------- ----------- ---------- ----------
Gross profit.......... 10,546,457 13,308,125 15,933,130 1,262,767 1,556,840
Selling, general and ad-
ministrative
expenses............... 9,047,698 10,680,612 12,592,779 2,214,267 3,001,438
----------- ----------- ----------- ---------- ----------
Operating income
(loss)............... 1,498,759 2,627,513 3,340,351 (951,500) (1,444,598)
Interest expense, net... 319,927 417,846 394,505 23,072 24,700
----------- ----------- ----------- ---------- ----------
Income (loss) before
income
taxes................ 1,178,832 2,209,667 2,945,846 (974,572) (1,469,298)
Income tax expense (ben-
efit).................. 460,000 906,000 1,210,000 (399,575) (602,000)
----------- ----------- ----------- ---------- ----------
Net income (loss)..... $ 718,832 $ 1,303,667 $ 1,735,846 $ (574,997) $ (867,298)
=========== =========== =========== ========== ==========
Net income (loss) per
share................ $ 0.20 $ 0.35 $ 0.49 $ (0.16) $ (0.25)
=========== =========== =========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

WORLD OF SCIENCE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 30,
1994................... 3,347,955 $33,480 $2,621,270 $3,984,780 $ 6,639,530
Issuance of common stock
at $1.10 per share..... 75,000 750 81,750 -- 82,500
Net income.............. -- -- -- 718,832 718,832
--------- ------- ---------- ---------- -----------
Balance at January 29,
1995................... 3,422,955 34,230 2,703,020 4,703,612 7,440,862
Net income.............. -- -- -- 1,303,667 1,303,667
--------- ------- ---------- ---------- -----------
Balance at January 28,
1996................... 3,422,955 34,230 2,703,020 6,007,279 8,744,529
Net income.............. -- -- -- 1,735,846 1,735,846
--------- ------- ---------- ---------- -----------
Balance at February 1,
1997................... 3,422,955 34,230 2,703,020 7,743,125 10,480,375
Net loss (unaudited).... -- -- -- (867,298) (867,298)
--------- ------- ---------- ---------- -----------
Balance at May 3, 1997
(unaudited)............ 3,422,955 $34,230 $2,703,020 $6,875,827 $ 9,613,077
========= ======= ========== ========== ===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

WORLD OF SCIENCE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
------------------------------------- ------------------------
JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1995 1996 1997 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating (UNAUDITED)
activities:
Net income (loss)....... $ 718,832 $ 1,303,667 $ 1,735,846 $ (574,997) $ (867,298)
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating
activities:
Depreciation and amor-
tization.............. 674,295 948,952 1,280,266 235,836 295,485
Change in assets and
liabilities:
(Increase) decrease
in:
Accounts receivable.. 255,605 79,628 11,155 (202,161) (174,046)
Inventories.......... (503,814) (613,027) (955,196) (1,293,424) (2,383,392)
Prepaid expenses and
other current
assets.............. (100,376) 48,398 (136,480) (132,339) (249,525)
Taxes receivable..... -- -- -- (399,575) (602,000)
Deferred income tax-
es.................. (225,000) (134,000) (292,000) -- --
(Decrease) increase
in:
Accounts payable..... 391,260 437,005 215,353 120,856 693,544
Accrued expenses..... 148,473 189,561 (36,352) (412,612) (175,748)
Accrued sales taxes.. 93,354 (63,303) 7,153 1,511 27,609
Income taxes pay-
able................ (52,731) 374,122 456,328 (939,642) (1,374,281)
Accrued occupancy ex-
pense............... 160,038 124,828 107,788 73,077 26,738
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in)
operating activi-
ties............... 1,559,936 2,695,831 2,393,861 (3,523,470) (4,782,914)
----------- ----------- ----------- ----------- -----------
Cash flows from investing
activities-- capital
expenditures, net of mi-
nor disposals........... (1,614,615) (1,579,030) (1,691,854) (374,450) (455,788)
----------- ----------- ----------- ----------- -----------
Cash flows from financing
activities:
Proceeds from issuance
of common stock........ 82,500 -- -- -- --
Proceeds from issuance
of line of credit...... -- -- -- 2,000,000 2,665,000
Proceeds from issuance
of long-term debt...... 725,000 -- -- 370,000 670,000
Principal payments on
long-term debt......... (783,749) (59,349) (63,918) (20,815) (22,444)
Principal payments on
capital leases......... (40,587) (92,545) (243,879) (22,754) (24,968)
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing ac-
tivities................ (16,836) (151,894) (307,797) 2,326,431 3,287,588
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............. (71,515) 964,907 394,210 (1,571,489) (1,951,114)
Cash and cash equivalents
at beginning of period.. 726,651 655,136 1,620,043 1,620,043 2,014,253
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents
at end of period........ $ 655,136 $ 1,620,043 $ 2,014,253 $ 48,554 $ 63,139
=========== =========== =========== =========== ===========
Supplemental disclosures
of cash flow informa-
tion:
Cash paid during the pe-
riod for:
Interest............... $ 321,987 $ 430,873 $ 405,624 $ 26,261 $ 29,514
Income taxes........... $ 737,731 $ 665,878 $ 1,045,671 $ 939,642 $ 1,374,281
=========== =========== =========== =========== ===========
Noncash investing and
financing activity:
Acquisition of equip-
ment under a capital
lease................. $ 293,117 $ 26,350 $ 240,345 $ 240,345 $ --
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.

F-6
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS

THREE-YEAR PERIOD ENDED FEBRUARY 1, 1997

(1) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

World of Science, Inc. (the Company), a Rochester, New York based
corporation, markets and distributes a large variety of science and nature
related products through its World of Science(R) retail stores, generally
located in regional shopping malls in the eastern half of the United States.

Fiscal Year

Reference to a fiscal year refers to the calendar year in which such fiscal
year commences. Accordingly, fiscal 1994 ended on January 29, 1995, fiscal
1995 ended on January 28, 1996 and fiscal 1996 ended on February 1, 1997.

In fiscal 1996, the Company changed its fiscal year end to the Saturday
closest to January 31. Previously the Company's fiscal year ended on the
Sunday closest to January 31. There were 52 weeks in fiscal years 1994 and
1995, and 53 weeks in fiscal 1996. There were 14 weeks in the three months
ended May 4, 1996 and 13 weeks in the three months ended May 3, 1997.

Cash Equivalents

Cash equivalents consist of amounts on deposit with banks and money market
funds.

Inventories

Inventories are stated at the lower of weighted average cost or market.

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are stated at cost.
Depreciation is computed for book and tax purposes using straight-line and
accelerated methods over the following periods:

<TABLE>
<S> <C>
Furniture, equipment and
temporary store fixtures........ 4-9 years
Leasehold improvements........... 4-10 years (or lease term, if shorter)
Truck............................ 4 years
</TABLE>

Construction allowances received from shopping mall operators, consisting of
cash payments and/or free rent periods, are deducted from the cost of
leasehold improvements.

Occupancy Expense

Occupancy expense is recorded on the straight-line basis over the term of
the leases, including certain leases under which lease payments escalate over
the term of the lease. Accrued occupancy expense is recorded for the excess of
expense determined on a straight-line basis over cash payments during the
escalation period.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period which includes
the enactment date.

F-7
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Use of Estimates

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

Store Openings and Closings

The Company expenses all costs associated with the opening of a store in the
current period, with the exception of leasehold improvements and fixtures
which are capitalized. The Company accrues the anticipated cost of closing a
store, including remaining lease obligations, if any, and the undepreciated
cost of leasehold improvements in the period in which the decision to close
the store is made.

Stock Option Plans

Prior to fiscal 1996, the Company accounted for its stock option plans in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
The Company adopted SFAS No. 123, Accounting for Stock-Based Compensation, in
fiscal 1996 which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
fiscal 1995 and future years as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
in fiscal 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. Adoption of this Statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.

Per Share Amounts

Net income (loss) per share is calculated using the weighted average number
of shares outstanding during the period increased by dilutive common stock
equivalents which include outstanding stock options and warrants, including an
option granted by the Company's Chairman and Chief Executive Officer to
purchase shares personally owned by him as discussed in note 9. Under the
rules of the Securities and Exchange Commission, stock options granted within
one year of the anticipated initial public offering of common stock (See note
2) are included as common stock equivalents for each of the fiscal years 1994,
1995, and 1996.

All share and per share amounts included in the financial statements
retroactively reflect a five-for-one stock split effective April 18, 1997 as
described in note 2. Weighted average shares outstanding totaled 3,665,578,
3,738,362, and 3,521,798 for fiscal 1994, 1995 and 1996 and 3,529,672 and
3,519,172 for the three months ended May 4, 1996 and May 3, 1997,
respectively. Primary and fully diluted earnings per share are the same for
fiscal years 1994, 1995 and 1996 and the interim periods ended May 4, 1996 and
May 3, 1997.

F-8
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" which is
effective for the Company in fiscal 1997. This statement simplifies the
standards for computing earnings per share but is not expected to result in
any material dilution of earnings per share.

Unaudited Interim Financial Information

The interim financial data included in these financial statements is
unaudited; however, in the opinion of management, such financial data includes
all adjustments of a normal recurring nature necessary for a fair presentation
of the Company's financial condition and results of operations.

(2) INITIAL PUBLIC OFFERING

On April 4, 1997, the Company's Board of Directors authorized the filing of
a registration statement for the initial public offering of its common stock.
In connection with this offering, the Company's Board of Directors approved an
increase in the authorized number of shares of common stock to 10,000,000, a
reduction in the par value of common stock from $0.05 to $0.01 per share, a
five-for-one stock split, authorization of a new class of 5,000,000 shares of
preferred stock, none of which has been issued, and an increase in the number
of common shares reserved for issuance under the Stock Option Plans to 565,000
shares. On April 16, 1997 the Company's shareholders approved a restated
certificate of incorporation to effect this recapitalization which was filed
and became effective on April 18, 1997.

The Company expects that the net proceeds from the initial public offering
will be approximately $8.5 million at a per share price of $6 per share.

(3) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

A summary of property, equipment and leasehold improvements follows:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Leasehold improvements--open stores.............. $4,281,064 5,139,806
Furniture, equipment and temporary store fix-
tures........................................... 2,455,103 3,056,180
Truck............................................ 16,115 --
Construction in progress......................... 169,917 314,931
---------- ---------
6,922,199 8,510,917
Less accumulated depreciation and amortization... 2,590,414 3,527,199
---------- ---------
$4,331,785 4,983,718
========== =========
</TABLE>

Construction allowances received from shopping mall developers totaling
$899,776, $575,712 and $981,035 in fiscal 1994, 1995 and 1996, respectively,
have been recorded as reductions of leasehold improvements.

Construction in progress at February 1, 1997 consists of leasehold
improvements and fixtures for stores which will be opening in fiscal 1997. All
stores with construction in progress at January 28, 1996 were opened during
the year ended February 1, 1997.

(4) LEASE AGREEMENTS

The Company leases retail space for stores, warehouse space, and vans. The
Company is granted concessions for certain leases related to retail space to
offset the cost of leasehold improvements. The Company records the concessions
as a reduction in the cost of leasehold improvements and charges gross rent
expense on a straight-line basis over the initial term of the lease.

F-9
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The future minimum lease payments under noncancelable operating leases
executed as of May 30, 1997 and the present value of future minimum capital
lease payments as of February 1, 1997 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- -----------
<S> <C> <C>
Fiscal year:
1997................................................ $116,418 $ 5,920,766
1998................................................ 115,614 4,167,798
1999................................................ 12,495 3,976,295
2000................................................ -- 3,610,658
2001................................................ -- 3,442,934
After 2001.......................................... -- 11,109,150
-------- -----------
Total minimum lease payments........................ 244,527 $32,227,601
===========
Less amount representing interest..................... 12,508
--------
Present value of net minimum capital lease payments... 232,019
Less current installments of obligations under capital
leases............................................... 101,620
--------
Obligations under capital leases, excluding current
installments......................................... $130,399
========
</TABLE>

Certain lease agreements for retail space provide for contingent rental
payments in excess of the minimum required payments if the specific store
exceeds certain sales levels. Rent expense in excess of the minimum required
amounts for the stores was $156,074, $246,880, and $212,559 for the fiscal
years 1994, 1995 and 1996, respectively.

Total rent expense under all leases amounted to $4,804,909, $5,768,239 and
$7,090,192 for fiscal years 1994, 1995 and 1996, respectively.

(5) INCOME TAXES

Income tax expense (benefit) for fiscal years 1994, 1995, and 1996, consists
of the following:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
---------- -------- ----------
<S> <C> <C> <C>
1994
Current................................... $ 527,000 $158,000 $ 685,000
Deferred.................................. (187,000) (38,000) (225,000)
---------- -------- ----------
$ 340,000 $120,000 $ 460,000
========== ======== ==========
1995
Current................................... $ 808,000 $232,000 $1,040,000
Deferred.................................. (112,000) (22,000) (134,000)
---------- -------- ----------
$ 696,000 $210,000 $ 906,000
========== ======== ==========
1996
Current................................... $1,163,000 $339,000 $1,502,000
Deferred.................................. (242,000) (50,000) (292,000)
---------- -------- ----------
$ 921,000 $289,000 $1,210,000
========== ======== ==========
</TABLE>

F-10
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A reconciliation of the expected tax expense, computed by applying the
statutory income tax rate of 34% to income before income taxes, to the actual
income tax expense follows:

<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- ----------
<S> <C> <C> <C>
Computed expected tax expense................ $401,000 $751,000 $1,002,000
State taxes, net of federal benefit.......... 80,000 139,000 191,000
Charitable contributions..................... (33,000) -- --
-------- -------- ----------
Other, net................................... 12,000 16,000 17,000
-------- -------- ----------
$460,000 $906,000 $1,210,000
======== ======== ==========
Effective tax rate......................... 39.0% 41.0% 41.0%
======== ======== ==========
</TABLE>

The significant components of deferred tax assets are presented below:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 1,
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Inventory.......................................... $142,000 $341,000
Accrued occupancy expense.......................... 227,000 272,000
Depreciation....................................... 247,000 268,000
Other.............................................. -- 27,000
-------- --------
Total gross deferred tax assets.................. 616,000 908,000
Less valuation allowance........................... -- --
-------- --------
Net deferred tax assets.......................... $616,000 $908,000
======== ========
</TABLE>

In assessing the realizability of deferred tax assets, management evaluates
whether it is more likely than not that some or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the projected
future taxable income and tax planning strategies in making this assessment.
Based on the level of historical taxable income and estimates of future
taxable income over the periods which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will realize
the benefits of these deductible differences. Accordingly, a valuation
allowance against total gross deferred tax assets is not considered necessary.

(6) LINES OF CREDIT

The Company has available lines of credit with a bank which had no
outstanding balances as of January 28, 1996 and February 1, 1997. A
description of the lines of credit follows:

<TABLE>
<CAPTION>
AVAILABLE
DESCRIPTION PURPOSE RATE MATURITY AMOUNT
----------- ------------------ ----------- ------------- --------------
<S> <C> <C> <C> <C>
Revolving line of credit Inventory Prime February 1998 $12,500,000 or
80% of the
inventory
Revolving line of Store construction
credit/multiple term and inventory
facilities Prime + .25% January 1999(1) $1,500,000
</TABLE>

- --------
(1) Any multiple term loans under this line are payable in 18 equal monthly
installments of principal commencing February 1 of the first calendar year
after issuance of each loan.

F-11
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Company pays a commitment fee on the unused portion of the revolving
lines of credit which is calculated at a rate of 1/4 of 1.0%. The lines are
collateralized by warehouse and store inventory.

The revolving line of credit includes sublimits of $12,000,000 for banker
acceptances and $1,000,000 for import letters of credit. At January 28, 1996
and February 1, 1997 no banker acceptances were outstanding, and the Company
was contingently liable under outstanding letters of credit of $153,951 and
$181,193, respectively.

The lines of credit contain restrictive covenants including requirements to
achieve certain financial ratios involving levels of net income, stockholders
equity, and inventory. The covenants restrict the Company from declaring any
dividends on common stock or purchasing, redeeming or retiring any of its
common stock in excess of $50,000 in aggregate in any fiscal year. The Company
was in compliance with such covenants at February 1, 1997.

The maximum outstanding balance under these lines of credit during fiscal
years 1995 and 1996 were $8,928,600 and $11,515,000, respectively. The average
balances outstanding were $4,242,000 and $4,224,000 for fiscal 1995 and 1996,
respectively.

(7) LONG-TERM DEBT

In addition to the $1,500,000 revolving line of credit/multiple term
facilities described in note 6, the Company has an available $1,000,000 line
for multiple term loans to be used for leasehold improvements and equipment.
Any multiple term loans under this line will mature in 60 months and the
available line expires in October 1997. Term loans originated under this line
will bear interest at prime plus 0.5% or the Company may opt for a fixed rate.

Under this line, the Company has a term loan with an outstanding balance of
$137,617 at February 1, 1997, for office and warehouse renovation and
equipment. This loan is payable in monthly installments of approximately
$6,400, including interest at 7.4% through November 1, 1998 and is secured by
equipment. The remaining available amount under the line is approximately
$862,000 as of February 1, 1997.

(8) BENEFIT PLANS

The Company does not currently offer and has not offered in the past,
postemployment or postretirement benefits to its current or former employees,
and accordingly, does not have a recorded liability for such benefits.

On January 29, 1996, the Company began sponsoring a 401(k) plan for all
employees who have met certain eligibility requirements. The Company matches
50% of employee contributions to the plan up to a maximum match of 2.5% of
employee compensation. For fiscal 1996, total expenses under the plan were
$66,532.

(9) STOCK OPTIONS AND WARRANTS

The Company has two Stock Option Plans (the Plans) for employees and
directors. The Plans authorize the issuance of options to purchase up to
640,000 shares of the Company's common stock adjusted for the five for one
stock split described in note 2. The Plans provide for options which may be
issued as qualified incentive stock options under Section 422A of the Internal
Revenue Code of 1986, as amended, as well as nonqualified stock options.

Options under the Plans are granted at the discretion of the Board of
Directors. The exercise price of qualified incentive stock options under the
Plans will not be less than the fair market value of the Company's

F-12
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

stock at the date of grant, as determined by the Board of Directors, except in
the case of an optionee owning more than 10% of the total combined voting
power of all classes of stock of the Company, the price at which shares of
stock may be purchased shall not be less than 110% of the fair market value.
Options to the extent vested can be exercised immediately. The options expire
five years from the date of grant for options granted to a person then owning
more than 10% of the voting power of all common stock and ten years from the
date of grant for all other officers and employees. Stock appreciation rights
may be granted in connection with stock options. Such rights are exercisable
by the optionee at any time a related option could be exercised, and are
payable in cash, common stock or any combination. The exercise of a stock
appreciation right results in cancellation of the related option. No stock
appreciation rights have been granted under the Plans.

Options granted in fiscal 1996 vest 20% upon grant date with the remaining
80% vesting ratably over a four year period. Options granted prior to fiscal
1996 vested 100% upon grant date.

At February 1, 1997, there were 400,000 shares available for grant under the
Plans. The per share weighted-average fair value of stock options granted
during fiscal 1996 was $2.00 on the date of grant using the Black Scholes
option-pricing model with the following weighted-average assumptions: No
expected dividend yield, weighted average expected volatility of 53.5%, risk-
free interest rate of 6.72%, and an expected life of ten years.

The Company applies APB Opinion No. 25 in accounting for its Plans and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based
on the fair value at the grant date for its stock options under SFAS No. 123,
the Company's net income for fiscal 1996 would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
1996
----------
<S> <C>
Net income:
As reported................................................... $1,735,846
Pro forma..................................................... 1,699,308
Net income per share:
As reported................................................... $ 0.49
Pro forma..................................................... 0.48
</TABLE>

Proforma net income reflects only options granted in fiscal 1996. Therefore,
the full impact of calculating compensation cost for stock options under SFAS
No. 123 is not reflected in the pro forma net income amounts presented above
because compensation cost is reflected over the options' vesting period of
five years and compensation cost for options granted prior to January 29, 1995
is not considered.

F-13
<PAGE>

WORLD OF SCIENCE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following is a summary of the change in options outstanding for fiscal
1994, 1995 and 1996:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
OPTIONS PRICE
--------- --------
<S> <C> <C>
Outstanding at January 30, 1994........................... 125,000 $1.40
Granted................................................. 20,000 2.10
Exercised............................................... (75,000) 1.10
Terminated.............................................. -- --
-------
Outstanding at January 29, 1995........................... 70,000 1.92
Granted................................................. -- --
Exercised............................................... -- --
Terminated.............................................. -- --
-------
Outstanding at January 28, 1996........................... 70,000 1.92
Granted................................................. 110,000 2.77
Exercised............................................... -- --
Terminated.............................................. (15,000) 1.80
-------
Outstanding at February 1, 1997........................... 165,000 2.50
=======
</TABLE>

At February 1, 1997, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $1.80--$3.00 and 8.5
years, respectively.

At January 28, 1996 and February 1, 1997, the number of options exercisable
was 70,000 and 77,000, respectively, and the weighted-average exercise price
of those options was $1.92 and $2.19, respectively.

In fiscal 1989, the Company granted an investment group, of which one member
is a director and stockholder of the Company, warrants to purchase 102,500
shares of common stock at $2.10 per share. These warrants expired unexercised
in May 1995.

In September 1990, the Company's Chairman and Chief Executive Officer (CEO)
granted the Company's former President an option to purchase 654,550 shares of
stock personally owned by the CEO at a price of $1.45 per share subject to
certain conditions and restrictions. This option terminated upon the former
President's resignation on January 17, 1996.

The option under this agreement is considered a common stock equivalent of
the Company and is included in the computation of net income per share for
fiscal 1994 and 1995 using the treasury stock method. The treatment of the
option in this manner reduced net income per share by $.01 in both fiscal 1994
and 1995.

F-14
<PAGE>

[INSIDE BACK PAGE OF PROSPECTUS]

[Photographs of Interiors of Stores]
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDER-
WRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITA-
TION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OF-
FERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICI-
TATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURIS-
DICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 10
Dividend Policy........................................................... 10
Capitalization............................................................ 11
Dilution.................................................................. 12
Selected Financial Data................................................... 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 14
Business.................................................................. 19
Management................................................................ 26
Certain Relationships and Related
Transactions............................................................. 31
Principal and Selling Stockholders........................................ 32
Description of Capital Stock.............................................. 34
Shares Eligible for Future Sale........................................... 36
Underwriting.............................................................. 38
Legal Matters............................................................. 40
Experts................................................................... 40
Available Information..................................................... 40
Index to Financial Statements............................................. F-1
</TABLE>

UNTIL AUGUST 2, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRIT-
ERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

2,450,000 SHARES

LOGO

COMMON STOCK

----------------

PROSPECTUS

----------------

A.G. EDWARDS & SONS, INC.

RAYMOND JAMES &ASSOCIATES, INC.

JULY 8, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses in connection with the issuance
and distribution of the Common Stock being registered, other than underwriting
discounts and commissions. All amounts except the registration fee payable to
the Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. ("NASD") are estimates.

<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 9,060
NASD Filing Fee.................................................. 3,490
Nasdaq National Market Listing Fee............................... 29,058
Legal Fees and Expenses.......................................... 130,000
Accountants Fees and Expenses.................................... 100,000
Printing and Engraving Fees...................................... 100,000
Blue Sky Fees and Expenses....................................... 1,000
Transfer Agent and Registrar Fee and Expenses.................... 3,000
Miscellaneous.................................................... 24,392
--------
Total.......................................................... $400,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 722 of the New York Business Corporation Law (the "BCL") empowers a
New York corporation to indemnify any persons who are, or are threatened to
be, parties to any action or proceeding (other than one by or in the right of
the corporation to procure a judgment in its favor), whether civil or
criminal, by reason of the fact that such person (or such person's testator or
intestate), was an officer or director of such corporation, or served at the
request of such corporation as a director, officer, employee, agent, or in any
other capacity, of another corporation or enterprise. The indemnity may
include judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees actually and necessarily incurred by such person as
a result of such action or proceeding, or any appeal therein, provided that
such officer or director acted in good faith, for a purpose that he or she
reasonably believed to be in or, in the case of service for another
corporation, not opposed to, the best interests of the corporation and, for
criminal actions or proceedings, in addition, had no reasonable cause to
believe his or her conduct was unlawful. A New York corporation may indemnify
officers and directors against amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily incurred by him
or her in connection with the defense or settlement of an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted in respect of (1) a threatened action, or a
pending action which is settled or otherwise disposed of, or (2) any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the corporation, unless and only to the extent judicially approved. Where
an officer or director is successful on the merits or otherwise in the defense
of an action referred to above, the corporation must indemnify him or her
against the expenses which such officer or director actually and reasonably
incurred.

In accordance with Section 402(b) of the BCL, the Certificate of
Incorporation of the Company contains a provision to limit the personal
liability of the directors of the Company to the fullest extent permitted
under the BCL; provided, however, that there shall be no limitation of a
director's liability for acts or omissions committed in bad faith, or that
involved intentional misconduct or a knowing violation of law, or from which a
director personally gained a financial profit or other advantage to which he
or she was not legally entitled. The effect of this provision is to eliminate
the personal liability of directors to the Company and its shareholders for
monetary damages for actions involving a breach of their fiduciary duty of
care, including any such actions involving gross negligence.

II-1
<PAGE>

Article VIII of the Form of By-Laws of the Company provides for
indemnification for the officers and directors of the Company to the full
extent permitted by applicable law.

In addition, the Company is obligated under the provisions of the
Underwriting Agreement to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriters may be required to make
in respect thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Except for the issuance of 15,000 shares of Common Stock (75,000 shares
after the stock split) of the Company to Fred Klaucke on May 27, 1994 in
connection with Mr. Klaucke's exercise of a portion of his stock options, the
Company has made no offers or sales of its securities within the past three
years. The issuance of shares of Common Stock to Mr. Klaucke was exempt from
the registration requirements of the Securities Act of 1933 pursuant to
Section 4(2) thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<C> <S>
1 Form of Underwriting Agreement.
3.1 Form of Restated Certificate of Incorporation of the Company.*
3.2 Form of Bylaws of the Company, as amended.*
4 Specimen Certificate of Common Stock of the Company.*
5 Opinion of Harris Beach & Wilcox, LLP.*
10.1 Employment Agreement dated February 1, 1996 by and between the Company
and Fred H. Klaucke.*
10.2 Covenant Not-to-Compete and Non-Disclosure Agreement dated June, 1989 of
Fred H. Klaucke.*
10.3 1993 Employee Stock Option Plan of the Company.*
10.4 1989 Incentive Stock Option Plan of the Company.*
10.5 Lease Agreement dated as of September 11, 1968 between the Company and
Genesee Valley Regional Market Authority, together with all amendments
thereto.*
10.6 Lease Agreement dated as of March 29, 1994 between the Company and BF
Realty Investors Rochester II Limited Partnership.*
10.7 Sublease dated as of March 31, 1997 between the Company and Tertrac
Associates.*
11 Computation of Earnings Per Share.
23 Consent of experts.
(a) Consent of counsel is included in Exhibit 5 above.*
(b) Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.*
</TABLE>
- --------
* Previously Filed.

II-2
<PAGE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(a) To provide to the underwriters at the closing specified in the
underwriting agreements, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.

(b) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) under the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.

(c) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER, STATE OF NEW
YORK ON JULY 8, 1997.

World of Science, Inc.

/s/ Fred H. Klaucke
By: _________________________________
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Fred H. Klaucke President and Chief
- ------------------------------------- Executive Officer, July 8, 1997
FRED H. KLAUCKE Chairman of the
Board

/s/ Charles A. Callahan Vice President of
- ------------------------------------- Finance, Chief July 8, 1997
CHARLES A. CALLAHAN Financial Officer
and Assistant
Secretary
(Principal
Accounting Officer)

* Director
- -------------------------------------
THOMAS A. JAMES

* Director
- -------------------------------------
RICHARD B. CALLEN

* Director
- -------------------------------------
THOMAS J. SCANLON

* By /s/ Fred H. Klaucke
--------------------------------- July 8, 1997
FRED H. KLAUCKE, AS ATTORNEY-IN-FACT

II-4

<PAGE>

EXHIBIT INDEX

<PAGE>
Exhibit 1
2,450,000 SHARES
COMMON STOCK
($.01 PAR VALUE)

UNDERWRITING AGREEMENT
----------------------

July 8, 1997

A.G. Edwards & Sons, Inc.
Raymond James & Associates, Inc.
As Representatives of the Several Underwriters
c/o A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103

The undersigned, World of Science, Inc., a New York corporation (the
"Company") and the persons listed on Schedule I hereto (the "Selling
Shareholders"), hereby address you as the representatives (the
"Representatives") of each of the persons, firms and corporations listed on
Schedule II hereto (collectively, the "Underwriters") and hereby confirm their
agreement with the several Underwriters as follows:

1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to the
Underwriters 1,600,000 shares of its Common Stock, par value $.01 per share, and
the Selling Shareholders propose to sell to the Underwriters a total of 850,000
shares of the Company's Common Stock, par value $.01 per share, as set forth on
Schedule I hereto (such shares of Common Stock are herein referred to as the
"Firm Shares"). Solely for the purpose of covering over-allotments in the sale
of the Firm Shares, the Company and M&T Capital Corporation (the "Principal
Selling Shareholder") further propose to grant to the Underwriters the right to
purchase up to an aggregate of 367,500 additional shares of the Company's Common
Stock (the "Option Shares"), as provided in Section 3 of this Agreement. The
Firm Shares and the Option Shares are herein sometimes referred to as the
"Shares" and are more fully described in the Prospectus hereinafter defined.

2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees and each Selling
Shareholder agrees, severally and not jointly, to sell to the Underwriters, and
each such Underwriter agrees, severally and not jointly, (a) to purchase from
the Company and from each of the Selling Shareholders, pro rata, at a purchase
price of $5.58 per share, the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule II hereto and (b) to purchase from the Company
and

<PAGE>

the Principal Selling Shareholder any additional number of Option Shares which
such Underwriter may become obligated to purchase pursuant to Section 3 hereof.

The Company and the Selling Shareholders will deliver definitive
certificates for the Firm Shares at the office of A.G. Edwards & Sons, Inc., 77
Water Street, New York, New York ("Edwards' Office"), or such other place as you
and the Company may mutually agree upon, for the accounts of the Underwriters
against payment to the Company and the Selling Shareholders of the purchase
price for the Firm Shares sold by them to the several Underwriters by wire
transfer or certified or bank cashiers' check in clearing house (same day
available) funds payable to the order of the Company and the Selling
Shareholders, respectively, and delivered to One North Jefferson Avenue, St.
Louis, Missouri 63103, or at such other place as may be agreed upon between you
and the Company (the "Place of Closing"), at 10:00 a.m., St. Louis time, on July
11, 1997, or at such other time and date not later than five full business days
thereafter as you and the Company may agree, such time and date of payment and
delivery being herein called the "Closing Date."

The certificates for the Firm Shares so to be delivered will be made
available to you for inspection at Edwards' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be in such names and denominations as you may request
at least three full business days prior to the Closing Date.

It is understood that an Underwriter, individually, may (but shall not be
obligated to) make payment on behalf of the other Underwriters whose checks
shall not have been received prior to the Closing Date for Shares to be
purchased by such Underwriter. Any such payment by an Underwriter shall not
relieve the other Underwriters of any of their obligations hereunder.

It is understood that the Underwriters propose to offer the Shares to the
public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.

3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company and the
Principal Selling Shareholder hereby grant options to the Underwriters to
purchase from them on up to 327,500 and 40,000 Option Shares, respectively, on
the same terms and conditions as the Firm Shares; provided, however, that such
-------- -------
options may be exercised only for the purpose of covering any over-allotments
which may be made by them in the sale of the Firm Shares and provided, further,
-------- -------
that such options shall be exercised first with respect to the Option Shares
held by the Principal Selling Shareholder. No Option Shares shall be sold or
delivered unless the Firm Shares previously have been, or simultaneously are,
sold and delivered.

The options are exercisable on behalf of the several Underwriters by you,
as Representatives, at any time, and from time to time, before the expiration of
45 days from

-2-
<PAGE>

the date of this Agreement, for the purchase of all or part of the Option Shares
covered thereby, by notice given by you to the Company and the Principal Selling
Shareholder in the manner provided in Section 13 hereof, setting forth the
number of Option Shares as to which the Underwriters are exercising the options,
and the date of delivery of said Option Shares, which date shall not be more
than five business days after such notice unless otherwise agreed to by the
parties. You may terminate the options at any time, as to any unexercised
portion thereof, by giving written notice to the Company and the Principal
Selling Shareholder to such effect.

You, as Representatives, shall make such allocation of the Option Shares
among the Underwriters as may be required to eliminate purchases of fractional
Shares.

Delivery of the Option Shares with respect to which the options shall have
been exercised shall be made to or upon your order at Edwards' Office (or at
such other place as you and the Company may mutually agree upon), against
payment by you of the per share purchase price to the Company and the Principal
Selling Shareholder by wire transfer or certified or bank cashier's check or
checks, payable in clearing house (same day available) funds. Such payment and
delivery shall be made at 10:00 a.m., St. Louis time, on the date designated in
the notice given by you as above provided for, unless some other date and time
are agreed upon, which date and time of payment and delivery are called the
"Option Closing Date." The certificates for the Option Shares so to be
delivered will be made available to you for inspection at Edwards' Office at
least one full business day prior to the Option Closing Date and will be in such
names and denominations as you may request at least three full business days
prior to the Option Closing Date. On the Option Closing Date, the Company and
the Principal Selling Shareholder shall provide the Underwriters such
representations, warranties, opinions and covenants with respect to the Option
Shares as are required to be delivered on the Closing Date with respect to the
Firm Shares.

4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
SELLING SHAREHOLDERS.

(a) The Company represents and warrants to and agrees with each Underwriter
that:

(i) A registration statement (Registration No. 333-25031) on Form S-1
with respect to the Shares, including a preliminary prospectus, and such
amendments to such registration statement as may have been required to the
date of this Agreement, has been carefully prepared by the Company pursuant
to and in conformity with the requirements of the Securities Act of 1933,
as amended (the "Act"), and the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission under the Act. Copies of
such registration statement, including any amendments thereto, each related
preliminary prospectus (meeting the requirements of Rule 430 or 430A of the
Rules

-3-
<PAGE>

and Regulations) contained therein, the exhibits, financial statements and
schedules have heretofore been delivered by the Company to you. If such
registration statement has not become effective under the Act, a further
amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become
effective will be filed promptly by the Company with the Commission. If
such registration statement has become effective under the Act, a final
prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will be filed
promptly by the Company with the Commission in accordance with Rule 424(b)
of the Rules and Regulations or a post-effective amendment containing such
information will be filed promptly by the Company with the Commission in
accordance with the Rules and Regulations of the Commission. The term
"Registration Statement" as used herein means the registration statement as
amended at the time it becomes or became effective under the Act (including
the effective time of any post-effective amendment) (each such effective
time, an "Effective Date"), including financial statements and all exhibits
and, if applicable, the information deemed to be included by Rule 430A of
the Rules and Regulations and including any registration statement that may
be filed pursuant to Rule 462(b) of the Rules and Regulations. The term
"Prospectus" as used herein means (i) the prospectus as first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations or,
(ii) if no such filing is required, the form of final prospectus included
in the Registration Statement at the Effective Date or (iii) if a Term
Sheet or Abbreviated Term Sheet (as such terms are defined in Rule 434(b)
and 434(c), respectively, of the Rules and Regulations) is filed with the
Commission pursuant to Rule 424(b)(7) of the Rules and Regulations, the
Term Sheet or Abbreviated Term Sheet and the last Preliminary Prospectus
filed with the Commission prior to the time the Registration Statement
became effective, taken together. The term "Preliminary Prospectus" as used
herein shall mean a preliminary prospectus as contemplated by Rule 430 or
430A of the Rules and Regulations included at any time in the Registration
Statement.

(ii) The Commission has not issued, and is not to the knowledge of the
Company threatening to issue, an order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus nor instituted proceedings for
that purpose. Each Preliminary Prospectus at its date of issue, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contains or will contain, as the case may be, all statements which
are required to be stated therein by, and in all material respects conform
or will conform, as the case may be, to the requirements of, the Act and
the Rules and Regulations. Neither the Registration Statement nor any
amendment thereto, as of the applicable Effective Date, and neither the
Prospectus nor any supplement thereto, contains or will contain, as the
case may be, any untrue statement of a material fact or omits or will omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that
-------- -------

-4-
<PAGE>

the Company makes no representation or warranty as to information contained
in or omitted from the Registration Statement or the Prospectus, or any
such amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of the
Underwriters specifically for use in the preparation thereof.

(iii) The filing of the Registration Statement and the execution and
delivery of this Agreement have been duly authorized by the Board of
Directors of the Company; this Agreement constitutes a valid and legally
binding obligation of the Company enforceable in accordance with its terms
(except to the extent the enforceability of the indemnification and
contribution provisions of Section 7 hereof may be limited by public policy
considerations as expressed in the Act as construed by courts of competent
jurisdiction, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditors'
rights generally and by general principles of equity); the issue and sale
of the Shares by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
violation of the Company's certificate of incorporation or bylaws or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company
under, any statute, or under any indenture, mortgage, deed of trust, note,
loan agreement, sale and leaseback arrangement or other agreement or
instrument to which the Company is a party or by which it is bound or to
which any of the properties or assets of the Company is subject, or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or their properties; no consent,
approval, authorization, order, registration or qualification of or with
any court or governmental agency or body is required for the consummation
of the transactions herein contemplated, except such as may be required by
the National Association of Securities Dealers, Inc. (the "NASD") or under
the Act or Rules and Regulations or any state securities laws.

(iv) Except as described in the Prospectus, the Company has not
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree. Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company has not incurred any
material liabilities or material obligations, direct or contingent, other
than in the ordinary course of business, or entered into any material
transactions not in the ordinary course of business, and there has not been
any material change in the capital stock or long-term debt of the Company
or any material adverse change in the condition (financial or other), net
worth, business, affairs, management, prospects or results of operations of
the

-5-
<PAGE>

Company. The Company has filed all necessary federal, state and foreign
income and franchise tax returns and paid all taxes shown as due thereon;
all tax liabilities are adequately provided for on the books of the Company
except to such extent as would not materially adversely affect the business
of the Company; the Company has made all necessary payroll tax payments and
is current and up-to-date as of the date of this Agreement; and the Company
has no knowledge of any tax proceeding or action pending or threatened
against the Company which might materially adversely affect its business or
property.

(v) Except as described in the Prospectus, there is not now pending
or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company is a party before or by any
court or public, regulatory or governmental agency or body which might be
expected to result (individually or in the aggregate) in any material
adverse change in the condition (financial or other), business or prospects
of the Company, or might be expected to materially and adversely affect
(individually or in the aggregate) the properties or assets thereof; and
there are no contracts or documents of the Company which would be required
to be filed as exhibits to the Registration Statement by the Act or by the
Rules and Regulations which have not been filed as exhibits to the
Registration Statement.

(vi) The Company has duly and validly authorized capital stock as
described in the Prospectus; all outstanding shares of Common Stock of the
Company and the Shares conform, or when issued will conform, to the
description thereof in the Registration Statement and the Prospectus and
have been or, when issued and paid for, will be duly authorized, validly
issued, fully paid and nonassessable; and the issuance of the Shares to be
purchased from the Company hereunder is not subject to preemptive rights.

(vii) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state or other
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease and operate its properties and conduct
its businesses as described in the Registration Statement; the Company is
duly qualified to do business as foreign corporation in good standing in
each state or other jurisdiction in which its ownership or leasing of
property or conduct of business legally requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the ability of the Company to conduct its business as described
in the Registration Statement; and the Company does not have and has never
had any subsidiary.

(viii) KPMG Peat Marwick LLP, the accounting firm which has certified
the financial statements filed with the Commission as a part of the
Registration Statement,

-6-
<PAGE>

is an independent public accounting firm within the meaning of the Act and
the Rules and Regulations.

(ix) The financial statements and schedules of the Company, including
the notes thereto, filed with and as a part of the Registration Statement,
are accurate in all material respects and present fairly the financial
position of the Company as of the respective dates thereof and the results
of operations and statements of cash flow for the respective periods
covered thereby, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
except as otherwise disclosed in the Prospectus. The selected financial
data included in the Registration Statement and Prospectus present fairly
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements in the Registration Statement
and Prospectus.

(x) The Company is not in default with respect to any contract or
agreement to which it is a party; provided that this representation shall
not apply to defaults which in the aggregate are not materially adverse to
the condition, financial or other, or the business or prospects of the
Company.

(xi) The Company is not in violation of any other laws, ordinances or
governmental rules or regulations to which it is subject, and the Company
has not failed to obtain any other license, permit, franchise, easement,
consent, or other governmental authorization necessary to the ownership,
leasing and operation of its properties or to the conduct of its business,
which violation or failure would materially adversely affect the business,
operations, affairs, properties, prospects, profits or condition (financial
or other) of the Company. The Company has not, at any time during the past
five years, (A) made any unlawful contributions to any candidate for any
political office, or failed fully to disclose any contribution in violation
of law, or (B) made any payment to any state, federal or foreign government
official, or other person charged with similar public or quasi-public duty
(other than payment required or permitted by applicable law).

(xii) Except as described in the Prospectus, the Company owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to conduct
the business now operated by them, and the Company has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
conduct of the business, operations, financial condition or income of the
Company.

(xiii) The Company has good and marketable title to all property owned
by it, free and clear of all liens, encumbrances, restrictions and defects
except such as are

-7-
<PAGE>

described in the Registration Statement or do not interfere with the use
made and proposed to be made of such property; and any property held under
lease or sublease by the Company is held under valid, subsisting and
enforceable leases or subleases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property by the Company, and the Company has no notice or knowledge of any
material claim of any sort which has been, or may be, asserted by anyone
adverse to the Company's rights as lessee or sublessee under any lease or
sublease described above, or affecting or questioning the Company's rights
to the continued possession of the leased or subleased premises under any
such lease or sublease in conflict with the terms thereof.

(xiv) Except as described in the Prospectus, there is no factual basis
for any action, suit or other proceeding involving the Company or any of
its material assets for any failure of the Company, or any predecessor
thereof, to comply with any requirements of federal, state or local
regulation relating to air, water, solid waste management, hazardous or
toxic substances, or the protection of health or the environment. Except as
described in the Prospectus, none of the property owned or leased by the
Company is, to the best knowledge of the Company, contaminated with any
waste or hazardous substances, and the Company may not be deemed an "owner
or operator" of a "facility" or "vessel" which owns, possesses, transports,
generates or disposes of a "hazardous substance" as those terms are defined
in (S)9601 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. (S)9601 et seq.
------

(xv) No labor disturbance exists with the employees of the Company or
is imminent which would have a material adverse effect on the Company.

(xvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the
Company's Common Stock, and the Company is not aware of any such action
taken or to be taken by affiliates of the Company.

(xvii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

(xviii) The Company carries, or is covered by, insurance in such
amounts and covering such risks as the Company believes is adequate for the
conduct of its business and the value of its respective properties and as
is customary for companies engaged in similar industries.

-8-
<PAGE>

(xix) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.

(xx) The Common Stock has been duly authorized for listing on the
National Association of Securities Dealers, Inc. Automated
Quotation/National Market System ("Nasdaq National Market System").

(b) Each Selling Shareholder severally, and not jointly, represents and
warrants to and agrees with each Underwriter and the Company that:

(i) All authorizations and consents necessary for the execution and
delivery by it of this Agreement and the sale and delivery of the Shares to
be sold by such Selling Shareholder hereunder have been given and are in
full force and effect on the date hereof and will be in full force and
effect on the Closing Date (and, if applicable, the Option Closing Date).

(ii) Such Selling Shareholder has, and on the Closing Date (and, if
applicable, the Option Closing Date) will have, good and valid title to the
Shares to be sold by such Selling Shareholder, free and clear of all liens,
mortgages, pledges, encumbrances, claims, equities and security interests
whatsoever, and will have, full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder.

(iii) Upon delivery of and payment for such Shares hereunder, the
several Underwriters will acquire valid and unencumbered title to such
Shares to be sold by such Selling Shareholder hereunder, free and clear of
all liens, mortgages, pledges, encumbrances, claims, equities and security
interests whatsoever.

(iv) The consummation by such Selling Shareholder of the transactions
contemplated herein and the fulfillment by such Selling Shareholder of the
terms hereof will not result in a violation or breach of any terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, note, loan agreement, sale and

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<PAGE>

leaseback arrangement or other agreement or instrument to which such
Selling Shareholder is a party, or of any order, rule or regulation
applicable to such Selling Shareholder of any court or of any regulatory
body of an administrative agency or other governmental body having
jurisdiction.

(v) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to or which might be reasonably expected
to cause or result in stabilization or manipulation of the price of the
Company's Common Stock, and such Selling Shareholder is not aware of any
such action taken or to be taken by affiliates of such Selling Shareholder.

(vi) When the Registration Statement becomes effective and at all
times subsequent thereto, such information in the Registration Statement
and Prospectus and any amendments or supplements thereto as specifically
refers to such Selling Shareholder will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.

(vii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Shareholder hereunder have been placed in the
custody of American Stock Transfer & Trust Company (the "Custodian") under
a Custody Agreement (the "Custody Agreement"), duly executed and delivered
by such Selling Shareholder, with the Custodian having the authority to
deliver the Shares to be sold by such Selling Shareholder hereunder, and
that such Selling Shareholder has duly executed and delivered a Power of
Attorney (the "Power of Attorney") appointing Fred H. Klaucke and Charles
A. Callahan as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with the Attorneys-in-Fact having authority to execute
and deliver this Agreement on behalf of such Selling Shareholder, to
determine the purchase price to be paid by the Underwriters to the Selling
Shareholders as provided in Section 2, to authorize the delivery of the
Shares to be sold by it hereunder and otherwise to act on behalf of such
Selling Shareholder in connection with the transactions contemplated by
this Agreement and such Custody Agreement.

(viii) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder, and the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Custodian under the Custody Agreement and of the
Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.

(ix) The obligations of such Selling Shareholders hereunder shall not
be terminated by operation of law, whether by the death or incapacity of
any individual Selling Shareholder or by the occurrence of any other event,
and if any Selling

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<PAGE>

Shareholder should die or become incapacitated, or if any other such event
should occur before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of each Selling
Shareholder in accordance with the terms and conditions of this Agreement
and of the Custody Agreement, and actions taken by the Custodian pursuant
to the Custody Agreement or by the Attorneys-in-Fact pursuant to the Power
of Attorney shall be as valid as if such death, incapacity or other event
had not occurred, regardless of whether or not the Custodian or Attorneys-
in-Fact, or any of them, shall have received notice of such death,
incapacity or other event.

(x) Such Selling Shareholder is not prompted to sell shares of Common
Stock by any information concerning the Company which is not included in
the Registration Statement.

(c) Any certificate signed by any officer of the Company and delivered to
you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
and any certificate signed by or on behalf of the Selling Shareholders as such
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Selling Shareholders to each Underwriter as
to the matters covered thereby.

5. ADDITIONAL COVENANTS. The Company and, where expressly indicated, the
Selling Shareholders, covenant and agree with the several Underwriters that:

(a) If the Registration Statement is not effective under the Act, the
Company will use its best efforts to cause the Registration Statement to become
effective as promptly as possible, and it will notify you, promptly after it
shall receive notice thereof, of the time when the Registration Statement has
become effective. The Company (i) will prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations, if required, a
Prospectus containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise or a Term Sheet or Abbreviated Term Sheet, as
applicable; (ii) will not file any amendment to the Registration Statement or
supplement to the Prospectus of which the Underwriters shall not previously have
been advised and furnished with a copy or to which the Underwriters shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations; and (iii) will promptly notify you after it shall have received
notice thereof of the time when any amendment to the Registration Statement
becomes effective or when any supplement to the Prospectus has been filed.

(b) The Company will advise the Underwriters promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, or of the issuance by the Commission of any stop
order suspending the effectiveness of the

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<PAGE>

Registration Statement or the use of the Prospectus or of the institution or
threatening of any proceedings for that purpose, and the Company will use its
best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.

(c) The Company will cooperate with the Underwriters and their counsel in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as they may have reasonably designated and will make such
applications, file such documents, and furnish such information as may be
necessary for that purpose, provided the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent or to subject itself to taxation as doing business in any
jurisdiction where it is not now so taxed. The Company will, from time to time,
file such statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as is reasonably
required for the offering, sale and distribution of the Shares.

(d) The Company will deliver to, or upon the order of, the Underwriters,
without charge from time to time, as many copies of any Preliminary Prospectus
as they may reasonably request. The Company will deliver to, or upon the order
of, the Underwriters without charge as many copies of the Prospectus, or as it
thereafter may be amended or supplemented, as they may from time to time
reasonably request. The Company consents to the use of such Prospectus by the
Underwriters and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for such other purposes
and for such period of time thereafter as the Prospectus is required by law to
be delivered in connection with the offering or sale of the Shares. The Company
will deliver to the Underwriters at or before the Closing Date two signed copies
of the Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Underwriters such number of copies of
the Registration Statement, without exhibits, and of all amendments thereto, as
they may reasonably request.

(e) If, during the period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in your judgment or in the opinion of
counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with law.

(f) The Company will make generally available to its shareholders and will
file as an exhibit in a report pursuant to the Securities Exchange Act of 1934,
as amended (the "1934

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<PAGE>

Act"), as soon as it is practicable to do so, but in any event not later than
the date prescribed by Section 11(a) of the Act, an earnings statement in
reasonable detail, covering a period of at least 12 consecutive months beginning
after the date prescribed by Section 11(a) of the Act, which earnings statement
shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise the Underwriters in writing when such
statement has been so made available.

(g) The Company will, for a period of five years from the Closing Date,
deliver to the Underwriters at their principal executive offices a reasonable
number of copies of annual reports, quarterly reports, current reports and
copies of all other documents, reports and information furnished by the Company
to its shareholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
1934 Act. The Company will deliver to the Underwriters similar reports with
respect to any significant subsidiaries, as that term is defined in the Rules
and Regulations, which are not consolidated in the Company's financial
statements. Any report, document or other information required to be furnished
under this paragraph (g) shall be furnished as soon as practicable after such
report, document or information becomes available.

(h) The Company will apply the proceeds from the sale of the Shares as set
forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all material respects with the requirements of Item 504
of Regulation S-K.

(i) The Company will supply you with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with the
registration of the Shares under the Act.

(j) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Company will furnish to you, as soon as they have been prepared,
copies of any unaudited interim financial statements of the Company for any
periods subsequent to the periods covered by the financial statements appearing
in the Registration Statement and the Prospectus.

(k) Prior to the Closing Date (and, if applicable, the Option Closing
Date), neither the Company nor any Selling Shareholder will issue any press
releases or other communications directly or indirectly and will hold no press
conferences with respect to the Company or any of its subsidiaries, the
financial condition, results of operations, business, properties, assets or
liabilities of the Company, or the offering of the Shares, without your prior
written consent.

(l) For a period of 180 days from the date of the final Prospectus, the
Company will not, and will use its best efforts to cause its directors and
officers to not, directly or indirectly offer for sale, sell, contract to sell
or otherwise dispose of any shares of the Company's Common Stock, any securities
exchangeable for Common Stock or any other rights to acquire such shares without
your prior written consent, except for the Shares sold

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<PAGE>

hereunder and except for sales of shares of Common Stock to the Company's
employees or directors pursuant to the exercise of options under the Company's
stock option plans.

(m) The Selling Shareholders will not directly or indirectly, for a period
of 365 days from the date of the final Prospectus in the case of the Principal
Selling Shareholder and 180 days from the date of the final Prospectus in the
case of all other Selling Shareholders, offer for sale, sell, contract to sell
or otherwise dispose of any shares of the Company's Common Stock, any securities
exchangeable for Common Stock or rights to acquire such shares without your
prior written consent, except for the Shares sold hereunder or request the
registration for the offer or sale of any of the foregoing (or as to which such
person has the right to direct the disposition of).

(n) The Company has caused each officer and director and specific
shareholders of the Company as requested by you, to furnish to you, on or prior
to the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall agree
not to, directly or indirectly, offer for sale, sell, contract to sell or
otherwise dispose of any shares of the Company's Common Stock, any securities
exchangeable for Common Stock or rights to acquire such shares or request the
registration for the offer or sale of any of the foregoing (or as to which such
person has the right to direct the disposition of) for a period of 180 days
after the date of the final Prospectus (or 365 days after the date of the final
Prospectus in the case of the Principal Selling Shareholder) without your prior
written consent (the "Lockup Agreements").

(o) The Company, and any subsidiaries of the Company in the future, will
maintain and keep accurate books and records reflecting their assets and
maintain internal accounting controls which provide reasonable assurance that
(1) transactions are executed in accordance with management's authorization, (2)
transactions are recorded as necessary to permit the preparation of the
Company's financial statements, and, if applicable, such subsidiaries on a
consolidated basis, and to maintain accountability for the assets of the Company
and such subsidiaries, (3) access to the assets of the Company and such
subsidiaries is permitted only in accordance with management's authorization,
and (4) the recorded accounts of the assets of the Company and such subsidiaries
are compared with existing assets at reasonable intervals.

6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares, as provided herein, shall
be subject to the accuracy, as of the date hereof and as of the Closing Date
(and, if applicable, the Option Closing Date), of the representations and
warranties of the Company and the Selling Shareholders contained herein, to the
performance in all material respects by the Company and the Selling Shareholders
of their covenants and obligations hereunder, and to the following additional
conditions:

(a) All filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made. No stop order suspending the effectiveness of
the Registration

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<PAGE>

Statement, as amended from time to time, shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened or contemplated by the Commission,
and any request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Underwriters.

(b) No Underwriter shall have disclosed in writing to the Company on or
prior to the Closing Date (and, if applicable, the Option Closing Date), that
the Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of fact which, in the opinion of counsel to the
Underwriters, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

(c) On the Closing Date (and, if applicable, the Option Closing Date), you
shall have received the opinion of Harris, Beach & Wilcox LLP, counsel for the
Company, addressed to you and dated the Closing Date (and, if applicable, the
Option Closing Date), to the effect that:

(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the states or other
jurisdictions in which it is incorporated, with full corporate power and
authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement; the Company is duly qualified
to do business as a foreign corporation in good standing in each state or
other jurisdiction in which its ownership or leasing of property or conduct
of business legally requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the ability
of the Company to conduct its business as described in the Registration
Statement; and, to the knowledge of such counsel after due inquiry, the
Company has no, and never has had any subsidiary.

(ii) The Company has duly and validly authorized capital stock as set
forth under the heading "Capitalization" in the Prospectus; all outstanding
shares of Common Stock of the Company and the Shares conform to the
description thereof in the Prospectus under the heading "Description of
Capital Stock", and the outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid and non-assessable; the
Shares to be sold by the Company have been duly authorized and, when
delivered and paid for in accordance with this Agreement, will be validly
issued, fully paid and non-assessable, and the shareholders of the Company
have no preemptive rights with respect to the Shares.

(iii) Except as described in or contemplated by the Prospectus, to the
knowledge of such counsel after due inquiry, there are no outstanding
securities of the

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<PAGE>

Company convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of capital stock of the Company and
there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock
or any securities convertible or exchangeable into or evidencing the right
to purchase or subscribe for any shares of such stock.

(iv) Except as described in the Prospectus, to the knowledge of such
counsel after due inquiry, no holder of any securities of the Company or
any other person has the right, contractual or otherwise, which has not
been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any
of the Shares or the right to have any Shares or other securities of the
Company included in the Registration Statement or the right, as a result of
the filing of the Registration Statement, to require registration under the
Act of any shares of Common Stock or other securities of the Company.

(v) Such counsel has been advised by the staff of the Commission that
the Registration Statement has become effective under the Act and, to the
knowledge of such counsel after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act.

(vi) The Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or issue date,
comply as to form and appear on their face to be appropriately responsive
in all material respects to the requirements of the Act and the applicable
rules and regulations (except that such counsel need express no opinion as
to the financial statements and financial statement schedules contained
therein).

(vii) The descriptions in the Registration Statement and Prospectus of
contracts and other documents filed as exhibits to the Registration
Statement are accurate in all material respects; all other material
agreements between the Company and third parties expressly referenced in
the Prospectus are legal, valid and binding obligations of the Company.

(viii) No authorization, approval, consent, order, registration or
qualification of or with of any court or governmental body, authority or
agency is required with respect to the Company in connection with the
transactions contemplated by this Agreement, except such as may be required
under the Act or the Rules and Regulations or as may be required by the
NASD or under state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters.

(ix) The filing of the Registration Statement has been duly authorized
by the Board of Directors of the Company. This Agreement has been duly
authorized,

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<PAGE>

executed and delivered by the Company. The performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a violation of the Company's certificate of incorporation or
bylaws or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company under, any statute, or under any indenture, mortgage, deed
of trust, note, loan agreement, sale and leaseback arrangement, or any
other agreement or instrument known to such counsel after due inquiry to
which the Company is a party or by which it is bound or to which any of the
properties or assets of the Company are subject, or any order, rule or
regulation known to such counsel after due inquiry of any court or
governmental agency or body having jurisdiction over the Company or its
properties, except, in the case of any such violation, breach, default,
creation or imposition, to such extent as does not materially adversely
affect the business of the Company.

(x) To the knowledge of such counsel after due inquiry,(A) there are
no material (individually or in the aggregate) legal, governmental or
regulatory proceedings pending or threatened to which the Company is a
party or of which the business or properties of the Company is the subject
which are not disclosed in the Registration Statement and Prospectus; (B)
there are no contracts or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which are not described or filed as
required; and (C) there are no statutes or regulations required to be
described in the Registration Statement or Prospectus which are not
described as required.

(xi) To the knowledge of such counsel after due inquiry, the Company
holds all licenses, certificates, permits and approvals from all state,
federal and other regulatory authorities, and have satisfied in all
material respects the requirements imposed by regulatory bodies,
administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company lawfully to own, lease and
operate its properties and conduct its business as described in the
Prospectus, and, to the knowledge of such counsel after due inquiry, the
Company is conducting its business in compliance in all material respects
with all of the laws, rules and regulations of each jurisdiction in which
it conducts its business.

(xii) The statements made in the Registration Statement under the
captions "Dividend Policy", "Capitalization", "Description of Capital
Stock", and "Certain Provisions of the Certificate and Bylaws", to the
extent that they constitute summaries of documents referred to therein or
matters of law or legal conclusions, have been reviewed by such counsel and
are accurate summaries and fairly present the information disclosed
therein.

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<PAGE>

(xiii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

Such counsel shall confirm that in the course of its duties in connection with
the preparation of the Registration Statement and Prospectus, nothing came to
such counsel's attention that would lead them to believe that either the
Registration Statement or Prospectus or any amendment or supplement thereto
(other than the financial statements and financial statement schedules contained
therein as to which such counsel need express no opinion) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

In rendering the foregoing opinion, such counsel may rely, provided that the
opinion shall state that you and they are entitled to so rely, (1) as to matters
involving laws of any jurisdiction other than New York or the United States,
upon opinions addressed to the Underwriters of other counsel satisfactory to
them and Ropes & Gray, and (2) as to all matters of fact, upon certificates and
written statements of the executive officers of, and accountants for, the
Company.

(d) On the Closing Date (and, if applicable, the Option Closing Date), you
shall have received the opinion of Harris, Beach & Wilcox LLP, counsel to the
Selling Stockholders, addressed to you and dated the Closing Date (and, if
applicable, the Option Closing Date), to the effect that:

(i) Each Selling Shareholder has duly authorized, executed and
delivered the Custody Agreement and Power of Attorney, appointing American
Stock Transfer & Trust Company as such Selling Shareholder's Custodian with
authority to take custody of and deliver the Shares as represented by
certificates on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement and
appointing Fred H. Klaucke and Charles A. Callahan as such Selling
Shareholder's attorneys-in-fact with authority to execute and deliver this
Agreement on behalf of such Selling Shareholder and otherwise to act on
behalf of such Selling Shareholder in connection with the transactions
contemplated by this Agreement and the Power of Attorney.

(ii) This Agreement has been duly authorized, executed and delivered
on behalf of the Selling Shareholders.

(iii) Each Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than as required by the
Act, the NASD and state securities and Blue Sky Laws) to sell, assign,
transfer and deliver the Shares to be sold by such Selling Shareholder.

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<PAGE>

(iv) No consent, approval, authorization or order of any court, or
governmental agency or body is required for consummation of the
transactions contemplated by this Agreement in connection with the Shares
to be sold by each Selling Shareholder hereunder except such as may be
required under the Act or the Rules and Regulations or as may be required
by the NASD or under state securities laws.

(v) Immediately prior to the time of delivery of the Shares being
purchased from the Selling Shareholders, each Selling Shareholder was the
sole registered owner of the Shares to be sold by such Selling Shareholder.
Following such time of delivery, each of the Underwriters will be the
registered owner of the Shares purchased by it from such Selling
Shareholder and, assuming the Underwriters purchase such Shares in good
faith and without notice of any adverse claim, the Underwriters, in
addition to acquiring all rights of such Selling Shareholder in such
Shares, will acquire such Shares, free of any adverse claim, and free of
any lien in favor of the Company, and any restrictions on transfer imposed
by the Company.

In rendering the foregoing opinion, such counsel may rely, provided that the
opinion shall state that you and they are entitled to so rely, (1) as to matters
involving laws of any jurisdiction other than the State of New York or the
United States, upon opinions addressed to the Underwriters of other counsel
satisfactory to them and Ropes & Gray, and (2) as to all matters of fact, upon
certificates and written statements of the Selling Shareholders.

(e) You shall have received on the Closing Date (and, if applicable, the
Option Closing Date), from Ropes & Gray, counsel to the Underwriters, such
opinion or opinions, dated the Closing Date (and, if applicable, the Option
Closing Date) with respect to the incorporation of the Company, the validity of
the Shares, the Registration Statement, the Prospectus and other related matters
as you may reasonably require; the Company and Selling Shareholders shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass on such matters.

(f) You shall have received at or prior to the Closing Date from Ropes &
Gray a memorandum or memoranda, in form and substance satisfactory to you, with
respect to the qualification or exemption for offering and sale by the
Underwriters of the Shares under state securities or Blue Sky laws of such
jurisdictions as the Underwriters may have designated to the Company.

(g) On each Effective Date as requested by you and on the Closing Date
(and, if applicable, the Option Closing Date), you shall have received from KPMG
Peat Marwick, LLP, a letter or letters, dated such Effective Date and the
Closing Date (and, if applicable, the Option Closing Date), respectively, in
form and substance satisfactory to you, confirming that they are independent
public accountants with respect to the Company within the meaning of the Act and
the published Rules and Regulations, and the answer to Item 509 of Regulation

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<PAGE>

S-K set forth in the Registration Statement is correct insofar as it relates to
them, and stating to the effect set forth in Schedule III hereto.

(h) Except as contemplated in the Prospectus, (i) the Company shall not
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree; and (ii)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company shall not have incurred
any liability or obligation, direct or contingent, or entered into transactions,
and there shall not have been any change in the capital stock or long-term debt
of the Company or any change in the condition (financial or other), net worth,
business, affairs, management, prospects or results of operations of the
Company, the effect of which, in any such case described in clause (i) or (ii),
is in your judgment so material or adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered on such Closing Date (and, if applicable, the Option Closing
Date) on the terms and in the manner contemplated in the Prospectus.

(i) There shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or the establishing on such exchanges by
the Commission or by such exchanges of minimum or maximum prices which are not
in force and effect on the date hereof; (ii) a general moratorium on commercial
banking activities declared by either federal or state authorities; (iii) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iii) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares in the manner contemplated in the Prospectus; (iv) any calamity or
crisis, change in national, international or world affairs, act of God, change
in the international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in this clause (iv) makes it impracticable or
inadvisable in your reasonable judgment to proceed with the public offering or
the delivery of the Shares in the manner contemplated in the Prospectus; or (v)
the enactment, publication, decree, or other promulgation of any federal or
state statute, regulation, rule, or order of any court or other governmental
authority, or the taking of any action by any federal, state or local government
or agency in respect of fiscal or monetary affairs, if the effect of any such
event specified in this clause (v) in your reasonable judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares in the manner contemplated in the Prospectus.

(j) You shall have received certificates, dated the Closing Date (and, if
applicable, the Option Closing Date) and signed by the President and the Chief
Financial Officer of the Company stating that (i) they have carefully examined
the Registration Statement and the

-20-
<PAGE>

Prospectus as amended or supplemented and nothing has come to their attention
that would lead them to believe that either the Registration Statement or the
Prospectus, or any amendment or supplement thereto as of their respective
effective or issue dates, contained, and the Prospectus as amended or
supplemented at such Closing Date, contains any untrue statement of a material
fact, or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and, that (ii) all representations
and warranties made herein by the Company are true and correct at such Closing
Date, with the same effect as if made on and as of such Closing Date, and all
agreements herein to be performed by the Company on or prior to such Closing
Date have been duly performed in all material respects.

(k) The Company and each of the Selling Shareholders shall not have failed,
refused, or been unable, at or prior to the Closing Date (and, if applicable,
the Option Closing Date) to have performed in all material respects any
agreement on their part to be performed or any of the conditions herein
contained and required to be performed or satisfied by them at or prior to such
Closing Date.

(l) The Company and the Selling Shareholders shall have furnished to you at
the Closing Date (and, if applicable, the Option Closing Date) such other
certificates as you may have reasonably requested as to the accuracy, on and as
of such Closing Date, of the representations and warranties of the Company and
the Selling Shareholders herein and as to the performance by the Company and the
Selling Shareholders of their obligations hereunder.

(m) The Shares shall have been approved for trading upon official notice of
issuance on the Nasdaq National Market System.

(n) Each of the Lockup Agreements described in Section 5(n) shall be in
full force and effect as of the Closing Date (and, if applicable, the Option
Closing Date).

All such opinions, certificates, letters and documents will be in compliance
with the provisions hereof only if they are reasonably satisfactory to you and
to Ropes & Gray, counsel for the several Underwriters. The Company and Selling
Shareholders will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you may request.

If any of the conditions specified above in this Section 6 shall not have been
satisfied at or prior to the Closing Date (and, if applicable, the Option
Closing Date) or waived by you in writing, this Agreement may be terminated by
you on notice to the Company and the Selling Shareholders.

7. INDEMNIFICATION.

(a) The Company and the Principal Selling Shareholder agree, jointly and
severally, to indemnify and hold harmless each Underwriter and each person, if
any, who

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<PAGE>

controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any blue sky application or other document executed by the Company or
based on any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and will reimburse
each Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that neither the Company nor the
Principal Selling Shareholder shall be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by you or by any Underwriter through you, specifically for use in the
preparation thereof; and provided, further, that in no event shall the liability
of the Principal Selling Shareholder for indemnification under this subsection
(a) exceed the proceeds received by the Principal Selling Shareholder in the
offering. This indemnity agreement shall be in addition to any liabilities
which the Company and the Principal Selling Shareholder, respectively, may
otherwise have.

(b) Each Selling Shareholder (other than the Principal Selling Shareholder)
agrees, jointly and not severally, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with written information furnished to the
Company or any Underwriter by such Selling Shareholder specifically for use in
the preparation thereof; and will reimburse any legal or

-22-
<PAGE>

other expenses reasonably incurred by each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that in no event shall the liability of any such Selling
- -------- -------
Shareholder for indemnification under this subsection (b) exceed the proceeds
received by such Selling Shareholder in the offering. This indemnity agreement
shall be in addition to any liabilities which the Selling Shareholders may
otherwise have.

(c) Each Underwriter agrees, jointly and not severally, to indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and, each person, if any, who controls the
Company within the meaning of the Act, and each Selling Shareholder, against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer or controlling person or any such Selling
Shareholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any amendment or supplement thereto, or any Blue Sky
Application or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, such Preliminary Prospectus or the Prospectus, such amendment or
supplement, or any Blue Sky Application in reliance upon and in conformity with
written information furnished to the Company by such Underwriter specifically
for use in the preparation thereof; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person or any such Selling Shareholder in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement shall be in addition to any liabilities which the
Underwriters may otherwise have.

(d) Any party which proposes to assert the right to be indemnified under
this Section 7 shall, within ten days after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a claim is
to be made against an indemnifying party under this Section 7, notify each such
indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not relieve such
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 7. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified

-23-
<PAGE>

party for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party at the expense of the indemnifying party has
been authorized by the indemnifying party, (ii) the indemnified party shall have
been advised by such counsel in a written opinion that there may be a conflict
of interest between the indemnifying party and the indemnified party in the
conduct of the defense, or certain aspects of the defense, of such action (in
which case the indemnifying party shall not have the right to direct the defense
of such action with respect to those matters or aspects of the defense on which
a conflict exists or may exist on behalf of the indemnified party), or (iii) the
indemnifying party shall not in fact have employed counsel to assume the defense
of such action, in any of which events such fees and expenses to the extent
applicable shall be borne by the indemnifying party. It is understood, however,
that the indemnifying parties shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all indemnified parties not having actual or potential differing
interests among themselves, which firm shall be designated in writing by A.G.
Edwards & Sons, Inc. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent. Each indemnified
party, as a condition of such indemnity, shall cooperate in good faith with the
indemnifying party in the defense of any such action or claim.

(e) If the indemnification provided for in this Section 7 is for any
reason, other than pursuant to the terms thereof, judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right to appeal) to be
unavailable to an indemnified party under subsections (a), (b) or (c) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company, the Selling
Shareholders and the Underwriters from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault, as
applicable, of the Company, the Selling Shareholders and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as other
relevant equitable considerations. The relative benefits received by, as
applicable, the Company, the Selling Shareholders, and the Underwriters shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the

-24-
<PAGE>

Selling Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no Selling Shareholder shall be required
to contribute more than the net proceeds received by such Selling Shareholder in
the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.

8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company and the Selling
Shareholders contained in Sections 7 and 11 herein or in certificates delivered
pursuant hereto, and the agreements of the Underwriters contained in Section 7
hereof, shall remain operative and in full force and effect regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any Underwriter or any controlling person, the Company or any of its
officers, directors or any controlling persons, or the Selling Shareholders, and
shall survive delivery of the Shares to the Underwriters hereunder.

9. SUBSTITUTION OF UNDERWRITERS.

(a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Shares on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the Company
and the Selling Shareholders shall be entitled to a further period of thirty-six
hours within which to procure another party or parties reasonably satisfactory
to you to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
Shareholders that you have so arranged for

-25-
<PAGE>

the purchase of such Shares, or the Company and the Selling Shareholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Shareholders shall have the right to postpone the
Closing Date for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any persons substituted
under this Section 9 with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.

(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of Shares which remains unpurchased does not exceed one tenth of the
total Shares to be sold on the Closing Date, then the Company and the Selling
Shareholders shall have the right to require each non-defaulting Underwriter to
purchase the Shares which such Underwriter agreed to purchase hereunder and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.

(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters made by you or the Company
and the Selling Shareholders as provided in subsection (a) above, the number of
Shares which remains unpurchased exceeds one tenth of the total Shares to be
sold on the Closing Date, or if the Company and the Selling Shareholders shall
not exercise the right described in subsection (b) above to require the non-
defaulting Underwriters to purchase Shares of the defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company and the Selling
Shareholders except for the expenses to be borne by the Company and the
Underwriters as provided in Section 11 hereof and the indemnity and contribution
agreements in Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.

10. EFFECTIVE DATE AND TERMINATION.

(a) This Agreement shall become effective at 1:00 p.m., St. Louis time, on
the first business day following the date of which the post-effective amendment
to the Registration Statement filed on or after the date hereof is declared
effective by the Commission or at such earlier time on or after the Effective
Date as you in your discretion shall first release the Shares for offering to
the public; provided, however, that the provisions of Section 7 and 11 shall at
-------- -------
all times be effective. For the purposes of this Section 10(a), the Shares
shall be

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<PAGE>

deemed to have been released to the public upon release by you of the
publication of a newspaper advertisement relating to the Shares or upon release
of telegrams, facsimile transmissions or letters offering the Shares for sale to
securities dealers, whichever shall first occur.

(b) This Agreement may be terminated by you at any time before it becomes
effective in accordance with Section 10(a) by notice to the Company and the
Selling Shareholders; provided, however, that the provisions of this Section 10
-------- -------
and of Section 7 and Section 11 hereof shall at all times be effective. In the
event of any termination of this Agreement pursuant to Section 9 or this Section
10(b) hereof, the Company and the Selling Shareholders shall not then be under
any liability to any Underwriter except as provided in Section 7 or Section 11
hereof.

(c) This Agreement may be terminated by you at any time at or prior to the
Closing Date by notice to the Company and the Selling Shareholders if any
condition specified in Section 6 hereof shall not have been satisfied on or
prior to the Closing Date. Any such termination shall be without liability of
any party to any other party except as provided in Sections 7 and 11 hereof.

(d) This Agreement also may be terminated by you, by notice to the Company
and the Selling Shareholders, as to any obligation of the Underwriters to
purchase the Option Shares, if any condition specified in Section 6 hereof shall
not have been satisfied at or prior to the Option Closing Date or as provided in
Section 9 of this Agreement. If you terminate this Agreement as provided in
Sections 10(b), 10(c) or 10(d), you shall notify the Company and the Selling
Shareholders by telephone or telegram, confirmed by letter.

11. COSTS AND EXPENSES. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto (except as otherwise expressly provided in Section 5(d)
hereof) and the printing, delivery and shipping of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, Underwriters' Questionnaires
and Powers of Attorney and Blue Sky Memoranda, (c) the furnishing of copies of
such documents (except as otherwise expressly provided in Section 5(d) hereof)
to the Underwriters, (d) the registration or qualification of the Shares for
offering and sale under the securities laws of the various states, including the
reasonable fees and disbursements of Underwriters' counsel relating to such
registration or qualification, (e) the fees payable to the NASD and the
Commission in connection with their review of the proposed offering of the
Shares, (f) all printing and engraving costs related to preparation of the
certificates for the Shares, including transfer agent and registrar fees, (g)
all initial transfer taxes, if any, (h) all fees and expenses relating to the
authorization of the Shares for trading on the Nasdaq National Market System,
(i) all travel expenses, including air fare

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<PAGE>

and accommodation expenses, of representatives of the Company in connection with
the offering of the Shares and (j) all of the other costs and expenses incident
to the performance by the Company of the registration and offering of the
Shares; provided, however, that the Underwriters will bear and pay the fees and
-------- -------
expenses of the Underwriters' counsel (other than fees and disbursements
relating to the registration or qualification of the Shares for offering and
sale under the securities laws of the various states), the Underwriters' out-of-
pocket expenses, and any advertising costs and expenses incurred by the
Underwriters incident to the public offering of the Shares; and provided,
further, that the Company will bear and pay the fees and expenses of the Selling
Shareholders' counsel.

If this Agreement is terminated by you in accordance with the provisions of
Section 10(c), the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel to the Underwriters.

12. DEFAULT OF SELLING SHAREHOLDERS. Failure or refusal by any of the
Selling Shareholders to sell and deliver on the Closing Date the Shares agreed
to be sold and delivered by such Selling Shareholder shall in no manner relieve
the other Selling Shareholders or the Company of their respective obligations
under this Agreement. If any Selling Shareholder should fail or refuse to sell
and deliver his Shares, the remaining Selling Shareholders shall have the right
hereby granted to increase, pro rata or otherwise, the number of Shares to be
sold by them hereunder to the total number of Shares to be sold by all Selling
Shareholders as set forth in Schedule I. If the remaining Selling Shareholders
do not fully exercise the right to increase the number of Shares to be sold by
them, the Underwriters, at your option, will have the right to elect to purchase
or not to purchase the Shares to be sold by the Company and the remaining
Selling Shareholders. In the event the Underwriters purchase the Shares of the
Company and such other Selling Shareholders pursuant to this Section 12, the
Closing Date shall be postponed for a period of not more than seven days in
order that the Registration Statement and Prospectus or other documents may be
amended or supplemented to the extent necessary under the provisions of the Act
and the Rules and Regulations or under the securities laws of any jurisdiction.
If the Underwriters determine not to purchase the Shares of the Company and the
other Selling Shareholders, if any, this Agreement shall terminate and neither
the Company nor the Underwriters nor any other Selling Shareholder shall be
under any obligation under this Agreement except as provided in Section 7 hereof
and except for the obligation of the Company to pay for such expenses as are set
forth in Section 11 hereof. Nothing herein shall relieve a defaulting Selling
Shareholder from liability for his default or from liability under Section 7
hereof or for expenses imposed by this Agreement upon such Selling Shareholder.

13. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o A.G. Edwards & Sons, Inc. at One North Jefferson
Avenue, St. Louis, Missouri 63103, Attention: Syndicate, facsimile number (314)
955-7387, or if sent to the Company shall be mailed, delivered, sent

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<PAGE>

by facsimile transmission, or telegraphed and confirmed to the Company at World
of Science, Inc., Building Four, 900 Jefferson Road, Rochester, NY 14623,
Attention: Fred H. Klaucke, facsimile number (716) 475-1370, or if sent to any
Selling Shareholder shall be mailed, delivered, sent by facsimile transmission
or telegraphed and confirmed to such Selling Shareholder, c/o the Attorney-in-
Fact at the address set forth above for the Company. Notice to any Underwriter
pursuant to Section 7 shall be mailed, delivered, sent by facsimile
transmission, or telegraphed and confirmed to such Underwriter's address as it
appears in the Underwriters' Questionnaire furnished in connection with the
offering of the Shares or as otherwise furnished to the Company and the Selling
Shareholder.

14. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriters and the Selling Shareholders, and the Company and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, corporation or
other entity, other than the parties hereto and their respective successors and
assigns and the controlling persons, officers and directors referred to in
Section 7, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person, corporation or other entity. No purchaser of
any of the Shares from any Underwriter shall be construed a successor or assign
by reason merely of such purchase.

In all dealings with the Company and the Selling Shareholders under this
Agreement you shall act on behalf of each of the several Underwriters, the
Company, and the Selling Shareholders shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of the Underwriters, made or
given by you on behalf of the Underwriters, as if the same shall have been made
or given in writing by the Underwriters.

15. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.

16. PRONOUNS. Whenever a pronoun of any gender or number is used herein,
it shall, where appropriate, be deemed to include any other gender and number.

17. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Missouri.

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<PAGE>

If the foregoing is in accordance with your understanding, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the Company, each of the Selling
Shareholders and the Underwriters.

WORLD OF SCIENCE, INC.

By:
---------------------------------

Title:
------------------------------

Selling Shareholders Named in Schedule I Hereto

By:
---------------------------------
Attorney-in-Fact

Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters
named in Schedule II hereto.

A.G. EDWARDS & SONS, INC.
RAYMOND JAMES & ASSOCIATES, INC.
By: A.G. EDWARDS & SONS, INC.

By:
-------------------------------------
Title:
-----------------------------------

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<PAGE>

SCHEDULE I

<TABLE>
<CAPTION>
Number of
Selling Shareholders Firm Shares
- -------------------- -----------
<S> <C>

B&J Management Corporation 12,500
Robert Brody 2,555
Todd Callen 1,665
Franklin Crowder & Susan Allport 10,000
Gaston V. DiBello 1,275
Robert DiRomualdo 25,000
Robert G. Fisher 12,745
Frank Fleischer 960
John & Iva Ann Francis 4,465
James Froehler 11,900
Andrew Glanz 5,000
Elliot Glanz 5,000
Benjamin A. Goldman Trust 5,000
Margot A. Green 2,780
Harbus Investors, Inc. 13,890
Jefferson Harkins 10,000
Larry & Molly Harris 5,000
Donna Hodak 1,275
Pamela K. Hodak 1,275
Tony Hodak 1,275
Jeffrey Huenink 10,000
R.K. Johnson 4,250
Allan Katz 10,000
Lincoln Kinnicutt 9,435
Harley Kushel 255
L. Wayne LeRoux 10,000
Dorothy Livadas 3,060
Joseph E. Lundy 2,000
David A. Metzger 6,600
Frederick W. Metzger 20,000
Henry N. Metzger 16,200
Gabriel S. Miller 10,000
Marc H. Miller 10,000
Ronald L. Miller, as Settlor
under Declaration of Trust 18,165
Sheila L. Miller 10,000
Michael & Junia Milvain 7,000
M&T Capital Corporation 515,555
Alton R. Neal 4,330
Marvin A. Posner 5,000
William J. Schifino 3,315
1770-1780 East Ridge Road, Inc. 6,445
Edith Sherdlower 10,000
Sheila Szewczuk 1,275
John P. Uphoff, Trustee 2,555
Linda Winton 15,000
Joan N. Witzel 2,000
Robert F. Witzel 4,000
-------
Total 850,000
</TABLE>

-31-
<PAGE>

SCHEDULE II

Name Number of Shares
- ---- ----------------
<S> <C>

A.G. Edwards & Sons, Inc. 815,000
Raymond James & Associates, Inc. 815,000

Alex. Brown & Sons Incorporated 49,000
Credit Lyonnais Securities (USA) Inc. 49,000
Dillon, Read & Co. Inc. 49,000
Donaldson, Lufkin & Jenrette Securities 49,000
Lehman Brothers 49,000
Oppenheimer & Co. Inc. 49,000
PaineWebber Incorporated 49,000
Prudential Secuities Incorporated 49,000

Advest Inc. 24,500
Fahnestock & Co. Inc. 24,500
First Albany Corporation 24,500
First of Michigan Corp. 24,500
Hanifen, Imhoff Inc. 24,500
Janney Montgomery Scott Inc. 24,500
Ladenburg Thalmann & Co. Inc. 24,500
Legg Mason Wood Walker Inc. 24,500
McDonald & Co. Securities Inc. 24,500
Mesirow Financial Inc. 24,500
Morgan Keegan & Co. Inc. 24,500
Needham & Co. 24,500
Neuberger Berman, LLC 24,500
Pennsylvania Merchant Group Ltd. 24,500
Tucker Anthony Inc. 24,500
Wheat First Securities 24,500

C.L. King & Associates, Inc. 12,000
Starr Securities Inc. 12,000
Van Kasper & Co. 12,000
---------
Total 2,450,000
</TABLE>

-32-
<PAGE>

SCHEDULE III

Pursuant to Section 6(g) of the Underwriting Agreement, KPMG Peat
Marwick, LLP shall furnish letters to the Underwriters to the effect that:

(i) They are independent certified public accountants with respect to
the Company within the meaning of the Act and the applicable Rules and
Regulations thereunder.

(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable,
prospective financial statements and/or pro forma financial information
examined) by them and included in the Prospectus or the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable Rules and Regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants ("AICPA") of the unaudited interim financial statements,
selected financial data, pro forma financial information, prospective
financial statements and/or condensed financial statements derived from
audited financial statements of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have
been furnished to the Representatives of the Underwriters (the
"Representatives").

(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, performing the procedures specified by the AICPA for a
review of interim financial information as discussed in SAS No. 71, Interim
Financial Information, on the latest available interim financial statements
of the Company, inspection of the minute books of the Company since the
date of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:

(A) any material modifications should be made to the unaudited
statements of consolidated income, statements of financial position
and statements of consolidated cash flows included in the Prospectus
for them to be in conformity with generally accepted accounting
principles, or the unaudited statements of income, statements of
consolidated financial position and statements of cash flows included
in the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations thereunder.

-33-
<PAGE>

(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items
in the unaudited financial statements from which such data and items
were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in
the Prospectus.

(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included in the Prospectus.

(D) any unaudited pro forma condensed financial statements included in
the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the published
rules and regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
those statements.

(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the capital stock or
any increase in the long-term debt of the Company, or any decreases in
working capital, net current assets or net assets or other items
specified by the Representatives, or any changes in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter.

(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in
Clause (E) there were any decreases in net revenues or operating
profit or the total or per share amounts of net income or any other
changes in any other items specified by the Representatives, in each
case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may occur or
which are described in such letter.

(iv) In addition to the audit referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph (iii) above, they
have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records

-34-
<PAGE>

of the Company for the periods covered by their reports and any interim or
other periods since the latest period covered by their reports, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representative, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and have found them to be in
agreement.

-35-

<PAGE>

EXHIBIT 11

SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER SHARE

<TABLE>
<CAPTION>
THREE THREE
YEAR YEAR YEAR YEAR YEAR MONTHS MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JANUARY 31, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 1, MAY 4, MAY 3,
1993 1994 1995 1996 1997 1996 1997
----------- ----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted average common
shares outstanding........ 2,374,539 3,347,955 3,397,955 3,422,955 3,422,955 3,422,955 3,422,955
Dilutive effect of stock
options granted in fiscal
1996 computed by use of
the treasury stock
method.................... 59,167 59,167 59,167 59,167 59,167 59,167 59,167
Dilutive effect of stock
options and warrants
issued prior to fiscal
1996, computed by use of
the treasury stock
method.................... 29,166 37,400 5,857 14,341 39,676 47,550 37,050
Dilutive effect of option
granted by Company's
chairman, computed by use
of the treasury stock
method (1)................ 127,274 180,001 202,599 241,899 -- -- --
--------- --------- --------- ---------- ---------- --------- ---------
Dilutive effect of options
and warrants.............. 215,607 276,568 267,623 315,407 98,843 106,717 96,217
--------- --------- --------- ---------- ---------- --------- ---------
Weighted average common and
common equivalent shares
outstanding............... 2,590,146 3,624,523 3,665,578 3,738,362 3,521,798 3,529,672 3,519,172
========= ========= ========= ========== ========== ========= =========
Computation of earnings per
share Net income / Average
common and common
equivalent shares
outstanding
Net income (loss).......... $827,000 $839,000 $719,000 $1,304,000 $1,736,000 (575,000) (867,000)
Earnings (loss) per share.. $ 0.32 $ 0.23 $ 0.20 $ 0.35 $ 0.49 (0.16) (0.25)
</TABLE>

- --------
(1) Represents the dilutive effect of an option to purchase shares owned by
the Company's Chairman, granted by the Chairman to the Company's former
President.

<PAGE>

EXHIBIT 23(B)

ACCOUNTANTS' CONSENT

The Board of Directors
World of Science, Inc.

We consent to the use of our report included herein and to the references to
our firm under the headings "Selected Financial Data" and "Experts" in the
Prospectus.

KPMG Peat Marwick LLP

Rochester, New York

July 8, 1997