2014

Derycz Scientific Reports Record Revenue for Second Quarter 2012 Results Include $12.1 Million in Second Quarter Revenue; Improvements in Gross Margin and Operating Expenses to Come in the Third Quarter

SANTA MONICA, Calif., Feb. 15, 2012 /PRNewswire/ -- Derycz Scientific, Inc. (OTCBB: DYSC), a leader in information logistics solutions and a pioneer in facilitating the flow of information from content publishers to enterprise customers in life science and other research intensive industries, today reported financial and operating results for the second quarter of its fiscal year 2012 (quarter ended December 31, 2011).

  • Fiscal year 2012 second quarter total revenue increased 42% to $12.1 million from $8.5 million in the fiscal year 2011 second quarter.
  • Fiscal year 2012 second quarter revenues from US operations increased 5% to $9 million from $8.5 million in the fiscal year 2011 first quarter.
  • Fiscal year 2012 second quarter revenues of $3.1 million from French subsidiary TAAG
  • Strong improvements in gross margin and operating expenses going forward
  • New, higher margin service offerings launched

Management Commentary

"We are very excited about our continued growth. Our customer list is growing, our core capabilities are improving and our geographic presence is expanding," said Peter Derycz, President and CEO. "Additionally, our product portfolio is also expanding as our new social, mobile and search tools come online. Article Galaxy™ is now live, as is Bibliogo™ which rapidly won the Software & Information Industry Association's "CODiE" award in the category of Best Online Science or Technology Service. The accolades keep coming in. We're honored and humbled, and wake up each day with the satisfaction of knowing that we're a valuable part of our customer's information workflows."

Alan Urban, Chief Financial Officer, added "As mentioned last quarter, we are now focusing on profitability and have already successfully completed numerous improvements in gross margin and operating expenses. We believe these changes will progress us towards profitability going forward."

Conference Call

Derycz Scientific management will host an investment-community conference call on Thursday, February 16, 2012 beginning at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these results and answer questions. To participate in the call please dial (866) 516-3002 for domestic callers or +1 (253) 237-1159 for international callers, and enter passcode 53633126 when prompted.

The webcast will also be available from the Company's Web site at www.deryczscientific.com. Listening to the webcast requires Internet access and the Windows Media Player or other compatible streaming media player. A recorded replay will be available on the deryczscientific.com website for 60 days following the conclusion of the call.

The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes thereto filed by the Company with the Securities and Exchange Commission on February 14, 2012 in its Quarterly Report on Form 10-Q for the period ended December 31, 2011. The Quarterly Report can be viewed at www.sec.gov.

Derycz Scientific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets






December 31,


June 30,


2011


2011


(unaudited)



Assets




Current assets:




Cash and cash equivalents

$

3,341,661


$

2,868,260

Accounts receivable:






Trade receivables, net of allowance of $160,493 and $223,298 , respectively


7,475,937



6,690,662

Due from factor


84,354



356,540

Inventory


591,522



759,507

Prepaid expenses


237,533



298,927

Prepaid royalties


459,423



1,245,872

Other current assets


1,007



18,320

Total current assets


12,191,437



12,238,088







Property and equipment, net of accumulated depreciation of $1,228,628 and $724,004, respectively      


1,044,627



1,666,462

Intangible Assets, net of accumulated amortization of $1,084,078 and $641,698 , respectively


1,602,420



1,883,660

Goodwill


1,567,604



1,567,604

Deposits and other assets


265,328



308,721

Total assets

$

16,671,416


$

17,664,535







Liabilities and Stockholders' Equity






Current Liabilities:






Accounts payable and accrued expenses

$

10,537,646


$

7,045,535

Capital lease obligation, current


307,004



663,973

Notes payable, current


44,030



53,252

Due to factor


312,441



312,440

Due to related parties


4,519



71,902

Line of credit


774,464



1,436,233

Deferred revenue


252,240



158,240

Total current liabilities


12,232,344



9,741,575







Notes payable, long term


77,053



110,080

Capital lease obligation, long term


1,153,734



1,281,600

Liability for estimated earnout


359,338



359,338

Deferred tax liability


350,000



350,000

Total liabilities


14,172,469



11,842,593







Commitments and contingencies (Note 8)












Stockholders' Equity:






Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and
    outstanding


-



-

Common stock; $0.001 par value; 100,000,000 shares authorized; 17,069,437 and 16,822,509
    shares issued and outstanding, respectively


17,069



16,823

Accumulated other comprehensive income (loss)


22,350



(11,590)

Additional paid-in capital


13,580,360



13,468,580

Accumulated deficit


(11,120,832)



(7,651,871)

Total stockholders' equity


2,498,947



5,821,942

Total liabilities and stockholders' equity

$

16,671,416


$

17,664,535



Derycz Scientific, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)






Three Months Ended


Six Months Ended


December 31,


December 31,


2011


2010


2011


2010









Revenue

$

12,089,519


$

8,514,233


$

21,950,738


$

14,530,890

Cost of revenue


10,310,259



7,944,794



18,699,001



13,144,602

Gross profit


1,779,260



569,439



3,251,737



1,386,288













Operating expenses:












Selling, general and administrative


3,003,386



1,774,122



5,630,831



2,922,153

Depreciation and amortization


480,094



66,375



966,095



125,925

Total operating expenses


3,483,480



1,840,497



6,596,926



3,048,078

Loss from operations


(1,704,220)



(1,271,058)



(3,345,189)



(1,661,790)













Currency gain (loss)


(242)



-



(1,707)



-

Other income


16,827



-



19,082



-

Interest expense


(71,319)



(33,508)



(123,013)



(48,658)

Interest income


417



1,124



724



1,735

Other expense


771



-



771



-

Loss before provision for income taxes                    


(1,757,766)



(1,303,442)



(3,449,332)



(1,708,713)

Provision for income taxes


(19,629)



-



(19,629)



-













Net loss


(1,777,395)



(1,303,442)



(3,468,961)



(1,708,713)

Other comprehensive income:

Foreign currency translation


14,337



-



33,940



-

Comprehensive loss

$

(1,763,058)


$

(1,303,442)


$

(3,435,021)


$

(1,708,713)













Net loss per share:












Basic and diluted

$

(0.10)


$

(0.09)


$

(0.20)


$

(0.13)













Weighted average shares outstanding:












Basic and diluted


17,069,437



14,157,760



17,022,467



13,584,643



Derycz Scientific, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
For the Six Months Ended December 31, 2011
(Unaudited)















Common Stock



Additional
Paid-in



Accumulated


Other
Comprehensive



Total
Stockholders'


Shares



Amount



Capital


Deficit


Income



Equity
















Balance, July 1, 2011                                           


16,822,509



$

16,823



$

13,468,580


$

(7,651,871)


$

(11,590)



$

5,821,942






















Fair value of options issued to
    employees


-




-




84,438



-







84,438






















Common shares issued upon
    exercise of warrants


246,928




246




(246)



-







-






















Fair value of warrants issued for
    services


-




-




210,712



-







210,712






















Adjustment to fair value of
    warrants granted to consultants










(447,838)










(447,838)






















Fair value of warrant extensions          


-




-




264,714



-







264,714






















Net loss for the period













(3,468,961)







(3,468,961)






















Foreign currency translation
















33,940




33,940






















Balance, December 31, 2011


17,069,437



$

17,069



$

13,580,360


$

(11,120,832)


$

22,350



$

2,498,947



Derycz Scientific, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)




Six Months ended


December 31,


2011



2010






Cash flow from operating activities:





Net loss

$

(3,468,961)



$

(1,708,713)

Adjustment to reconcile net loss to net cash provided by (used in) operating activities:                            







Depreciation and amortization


1,004,565




161,893

Fair value of vested stock options


84,438




47,475

Fair value of warrants issued for services


(237,126)




448,662

Fair value of common shares issued for services


-




17,648

Fair value of warrant extensions 


264,714




-








Changes in assets and liabilities:







Accounts receivable


(785,273)




(1,063,934)

Inventory


167,985




(2,687)

Due from factor


272,186




-

Prepaid expenses


61,394




(82,228)

Prepaid royalties


786,449




-

Other assets


60,706




12,853

Accounts payable and accrued expenses


3,492,110




13,044

Other current liabilities


94,000




(12,892)

Net cash provided by (used in) operating activities


1,797,187




(2,168,879)








Cash flow from investing activities:







Purchase of property and equipment


(44,607)




(21,719)

Purchase of intangible assets


(161,140)




(98,998)

Acquisition of remaining interest in Pools Press


-




(120,000)

Net cash used in investing activities


(205,747)




(240,717)








Cash flow from financing activities:







Issuance of shares upon exercise of warrants


-




2,484,187

Payment of notes payable


(42,249)




-

Payment of capital lease obligation


(484,835)




(16,864)

Payment of related parties


(67,383)




-

Advances (payments) under line of credit


(661,769)




1,284,987

Net cash provided by (used in) financing activities


(1,256,236)




3,752,310

Effect of exchange rate changes


138,197




-

Net increase in cash and cash equivalents


473,401




1,342,714

Cash and cash equivalents, beginning of period


2,868,260




1,852,231

Cash and cash equivalents, end of period

$

3,341,661



$

3,194,945








Supplemental disclosures of cash flow information:







Cash paid for income taxes

$

19,629



$

-

Cash paid for interest

$

123,014



$

33,508








Supplemental disclosures of non-cash investing and financing activities:







Adjustment to additional paid in capital to reflect acquisition of remaining noncontrolling
    interest

$

-




34,904



About Derycz Scientific®

Derycz Scientific, Inc. is an information logistics company. The company and its subsidiaries develop products, services and systems to facilitate the re-use of published content in a manner that helps organizations achieve their marketing, communication and research goals effectively and in compliance with copyright law and regulatory rules. Subsidiary companies include Reprints Desk, Inc., and Techniques Appliquees aux Arts Graphiques, S.p.A. (TAAG). For more information, please visit www.deryczscientific.com.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in technology and product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. The Company assumes no obligation to update the cautionary information in this release.

SOURCE Derycz Scientific, Inc.



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