WORLD OF SCIENCE INC, 424B3, 1997-08-26

WORLD OF SCIENCE INC
424B3, 1997-08-26
MISC GENERAL MERCHANDISE STORES

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<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-25031

2,450,000 SHARES

LOGO

COMMON STOCK

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

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."

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

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.

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

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
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................. $6.00 $.42 $5.58 $5.58
- --------------------------------------------------------------------------------
Total(3)................... $14,700,000 $1,029,000 $8,928,000 $4,743,000
</TABLE>
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- -------------------------------------------------------------------------------
(1) The Company, the Selling Stockholders and certain other stockholders of
the Company 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 certain stockholders of the Company 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 (and certain other stockholders of the Company) will be
$16,905,000, $1,183,350, $10,643,850, and $5,077,800, respectively. See
"Underwriting."

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

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 (5,330,455 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 ($10.2 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 and other stockholders of the
Company.

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.

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. Of the shares jointly owned, 10,000 shares are subject to the
Underwriters' over-allotment option.
(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. Of Mr. Callen's shares, 10,000 shares are subject to the
Underwriters' over-allotment option.
(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 (5,330,455 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 53,305 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 certain stockholders of the Company 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 M & T
Capital, 10,000 shares will next come from Mr. Klaucke and Laura Klaucke, his
wife, jointly and then 10,000 shares will come from Mr. Callen. The balance,
if any, up to 307,500 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, the Selling Stockholders, Mr. and Mrs. Klaucke and Mr. Callen
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>

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

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.

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

2,450,000 SHARES

LOGO

COMMON STOCK

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

PROSPECTUS

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

A.G. EDWARDS & SONS, INC.

RAYMOND JAMES & ASSOCIATES, INC.

JULY 8, 1997

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