Derycz Scientific Reports 34% Revenue Increase For Fiscal 2011

Fourth Quarter Revenues Grow 77%

Conference Call Begins at 11:00 a.m. Eastern Time Today

SANTA MONICA, Calif., Sept. 29, 2011 /PRNewswire/ -- Derycz Scientific, Inc. (OTC Bulletin Board: DYSC), a company that is pioneering a fresh way of facilitating the flow of information from content publishers to enterprise customers and their constituents, today reported financial and operating results for the fiscal year ended June 30, 2011.

Financial highlights include the following:

Fiscal 2011 full year revenues increased 34% to $33.5 million from $24.9 million in fiscal 2010.
Fiscal 2011 fourth quarter revenues increased 77% to $11.3 million from $6.4 million in the fiscal 2010 fourth quarter.

"The past fiscal year was one of tremendous growth for Derycz Scientific. We raised revenues by 34% while significantly expanding our customer base and publisher agreements, and adding to our technology solutions through new business relationships," said Peter Derycz, President and CEO of Derycz Scientific. "Among our notable recent accomplishments, we completed our acquisition of Techniques Appliquees aux Arts Graphiques, S.p.A. (TAAG), which provides the Company with a physical presence in Europe, and provides global customers with a truly global information logistics solution.

"While our loss widened compared with the prior year, due principally to expenses related to warrant and option grants issued to the Company's consultants, directors and employees, in addition to costs associated with the amortization of guaranteed payments required under publisher agreements, and one-time costs associated with the acquisition of TAAG, we foresee the attainment of our profitability goals within a reachable timeframe. Our optimism is fueled by our development of new, higher-margin products that we intend to sell into our existing customer base.

"As I previously stated at the end of the last quarter, we expect to continue significant revenue growth and improve our bottom line for coming quarters and fiscal 2012," added Mr. Derycz. "We remain focused on our goals of growing our sales capabilities and enhancing our current line of products."

Fiscal 2011 Financial Results

For fiscal 2011, revenues increased 34% to $33.5 million from $24.9 million in fiscal 2010. The Company reported a net loss of $5,407,606 for the year ended June 30, 2011 compared to a net loss of $307,193 for the year ended June 30, 2010. Approximately $1,418,000 of the loss is attributable to expenses related to warrant and option grants issued to the Company's consultants, directors and employees. Revenues from the Company's wholly owned subsidiary Reprints Desk increased 25% to $27.5 million from $22.0 million in fiscal 2010. Pools Press contributed $2.2 million for the year and TAAG contributed $3.8 million for the three months ended June 30, 2011. Gross margin decreased from 15% during the year ended June 30, 2010 to 12% for the year ended June 30, 2011. The Company expects gross margin percentage to improve as TAAG's higher gross margin sales will contribute to the Company's overall gross margins and as it begins to market some higher gross margin products at Reprints Desk.

General and administrative expenses were $7.9 million for fiscal 2011, compared with $3.6 million in fiscal 2010. Marketing and advertising expenses were $619,000, compared with $440,000 in the prior year. For fiscal 2011, the Company reported a net loss of $5,407,606, or $0.36 per share, compared with a net loss of $307,000, or $0.02 per share, for fiscal 2010.

As of June 30, 2011, the Company had cash and cash equivalents of $2.9 million, compared to $1.9 million as of June 30, 2010.

Fiscal Fourth Quarter Financial Results

For the fiscal 2011 fourth quarter, revenues increased 77% to $11.3 million, from $6.4 million in the fiscal 2010 fourth quarter. This increase was due primarily to the Company's acquisition of TAAG and sales growth at Reprints Desk. Financial information for the fourth quarter of fiscal 2011 should be read in conjunction with the fiscal 2011 Financial Results set forth above and the Company's Annual Report on Form 10-K, filed today with the Securities and Exchange Commission.

Conference Call

Derycz Scientific management will host an investment-community conference call today beginning at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to discuss these results and answer questions. To participate in the call please dial (888) 424-8151 for domestic callers, or +1 (847) 585-4422 for international callers, and enter passcode 7292 723 when prompted.

A telephone replay will be available for 30 days following the conclusion of the call by dialing (888) 843-7419 for domestic callers, or +1 (630) 652-3042 for international callers, and entering reservation code 7292 723 when prompted.

Derycz Scientific, Inc. Consolidated Balance Sheets
	June 30,		June 30,
	2011		2010

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	2,868,260	$	1,852,231
Accounts receivable:
Trade receivables, net of allowance of $223,298 and $59,061, respectively		6,690,662		4,448,269
Due from factor		356,540		-
Inventory		759,507		6,628
Prepaid expenses		298,927		-
Prepaid royalties		1,245,872		714,287
Other current assets		18,320		84,470

TOTAL CURRENT ASSETS		12,238,088		7,105,885

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $724,004 and $317,629, respectively		1,666,462		372,868

INTANGIBLE ASSETS
Customer lists, net of accumulated amortization of $112,085 and $50,000		663,830		-
Covenant not to compete, net of accumulated amortization of $71,791 and $0		502,533		-
Intellectual property licenses, net of accumulated amortization of $457,822 and $297,887		717,297		674,779

GOODWILL		1,567,604		223,385

DEPOSITS AND OTHER ASSETS		308,721		-
TOTAL ASSETS	$	17,664,535	$	8,376,917

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	6,296,566	$	4,887,636
Capital lease obligation, current		663,973		33,682
Accrued expenses and other current liabilities		748,969		97,824
Notes payable, current		53,252		-
Due to factor		312,440		-
Due to related parties		71,902		-
Line of credit		1,436,233		-
Deferred revenue		158,240		-
TOTAL CURRENT LIABILITIES		9,741,575		5,019,142

Notes payable , long term		110,080		-
Capital lease obligation, long term		1,281,600		43,514
Liability for estimated earnout		359,338		-
Deferred tax liability		350,000		-

TOTAL LIABILITIES		11,842,593		5,062,656

COMMITMENTS AND CONTINGENCIES

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; 16,822,509 and 13,001,830 shares issued and outstanding		16,823		13,002
Accumulated other comprehensive loss		(11,590)		-
Additional paid-in capital		13,468,580		5,510,620
Accumulated deficit		(7,651,871)		(2,244,265)

TOTAL STOCKHOLDERS' EQUITY		5,821,942		3,279,357

NONCONTROLLING INTEREST		-		34,904

TOTAL EQUITY		5,821,942		3,314,261

TOTAL LIABILITIES AND EQUITY	$	17,664,535	$	8,376,917

Derycz Scientific, Inc. Consolidated Statements of Operations and Other Comprehensive Income (Loss)
	Years ended
	June 30,
	2011		2010

NET SALES	$	33,500,438	$	24,935,473

COST OF SALES		29,594,012		21,019,225

GROSS PROFIT		3,906,426		3,916,248

OPERATING EXPENSES:
General and administrative		7,870,454		3,590,933
Marketing and advertising		618,976		439,877
Depreciation and amortization		673,881		206,616

TOTAL OPERATING EXPENSES		9,163,311		4,237,426

LOSS FROM OPERATIONS		(5,256,885)		(321,178)

Currency gain (loss)		(23,363)		-
Other Income		13,480		5,415
Interest expense		(144,069)		(6,919)
Interest income		3,231		4,169

LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTEREST		(5,407,606)		(318,513)

PROVISION FOR INCOME TAXES		-		(1,133)

NET LOSS		(5,407,606)		(319,646)

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		-		12,453

NET LOSS ATTRIBUTABLE TO DERYCZ SCIENTIFIC, INC.		(5,407,606)		(307,193)

OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation		(11,590)		-

COMPREHENSIVE LOSS	$	(5,419,196)	$	(307,193)

NET LOSS PER SHARE:
BASIC AND DILUTED	$	(0.36)	$	(0.02)

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED		14,964,504		12,966,830

Derycz Scientific, Inc. Consolidated Statement of Stockholders' Equity For the years ended June 30, 2011 and 2010
					Additional paid-in								Total stockholders'
	Common stock				Additional paid-in		Accumulated		Noncontrolling			Other Comprehensive	Total stockholders'
	Shares		Amount		capital		Deficit		Interest			Income	Equity

Balance, July 1, 2009		12,961,830	$	12,962	$	5,450,223	$	(1,937,072)	$	47,357	$	-	$	3,573,470

Fair value of shares issued for services		40,000		40		45,960								46,000

Fair value of warrants issued for services						14,437								14,437

Net loss for the period								(307,193)		(12,453)				(319,646)

Balance, July 1, 2010		13,001,830		13,002		5,510,620		(2,244,265)		34,904		-		3,314,261

Acquisition of remaining interest in Pools Press		-		-		(120,000)		-		-				(120,000)

Adjustment for noncontrolling interest in Pools Press		-		-		34,904		-		(34,904)				-

Fair value of common shares issued for services		38,565		39		76,084		-		-				76,123

Fair value of options issued to employees		-		-		121,643		-		-				121,643

Common shares issued upon exercise of warrants		2,170,193		2,170		2,482,017		-		-				2,484,187

Fair value of common shares issued for customer list		75,000		75		71,175		-		-				71,250

Fair value of warrants issued for services		-		-		1,175,748		-		-				1,175,748

Fair value of warrants issued to directors for services		-		-		120,978		-		-				120,978

Common shares issued for cash		1,200,000		1,200		2,782,832		-		-				2,784,032

Common shares issued for acquisition of TAAG		336,921		337		1,212,579		-		-				1,212,916
Net loss for the period								(5,407,606)		-				(5,407,606)

Foreign currency translation												(11,590)		(11,590)

Balance, June 30, 2011		16,822,509	$	16,823	$	13,468,580	$	(7,651,871)	$	-	$	(11,590)	$	5,821,942

Derycz Scientific, Inc. Consolidated Statements of Cash Flows
	Years ended
	June 30,
	2011		2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,407,606)	$	(319,646)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		750,190		270,981
Fair value of vested stock options		121,643		14,433
Fair value of warrants issued for services		1,296,726		46,000
Fair value of common shares issued for services		76,123		-

Changes in assets and liabilities:
Accounts receivable		(167,479)		(948,421)
Inventory		130,792		3,560
Due from Factor		(71,932)		-
Prepaid expenses		(68,339)		496,307
Prepaid royalties		(531,585)		-
Other current assets		(2,562)		(46,581)
Accounts payable and accrued expenses		(922,159)		1,851,021
Other current liabilities		(296,233)		(19,544)
Income taxes payable		(600)		(3,059)

Net cash provided by (used in) operating activities		(5,093,021)		352,441

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment		(121,058)		(118,811)
Purchase of Intellectual Property licenses		(245,925)		(208,570)
Cash acquired upon acquisition of TAAG		325,383		-
Acquisition of remaining interest in Pools Press		(120,000)		-

Net cash used in investing activities		(161,600)		(327,381)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of bank loans		(277,892)		-
Payment of capital lease obligation		(144,320)		(26,922)
Issuance of shares upon exercise of warrants for cash		2,484,187		-
Issuance of common shares and warrants for cash		2,784,032		-
Advances under line of credit		1,436,233		-

Net cash provided by (used in) financing activities		6,282,240		(26,922)

Effect of exchange rate changes		(11,590)		-

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,016,029		(1,862)

CASH AND CASH EQUIVALENTS, Beginning of period		1,852,231		1,854,093

CASH AND CASH EQUIVALENTS, End of period	$	2,868,260	$	1,852,231

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Taxes paid	$	-	$	32,174
Interest paid	$	146,206	$	6,919

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Adjustment to additional paid in capital to reflect acquisition of remaining noncontrolling interest	$	34,904		-
Acquisition of customer list through the issuance of common shares	$	71,250		-
Capital lease obligation	$	-		42,640
Issuance of common shares for acquisition	$	1,212,195		-
Liability for estimated earnout on acquisition	$	359,338		-
Minority share of losses of subsidiary	$	-		12,453


See notes to consolidated financial statements

About Derycz Scientific®

Derycz Scientific, Inc. develops companies, products, services and systems that 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. Its subsidiary companies include Reprints Desk, Inc., Pools Press, Inc. and Techniques Appliquees aux Arts Graphiques, S.p.A. (TAAG). Reprints Desk improves how journal articles and clinical reprints are accessed, procured, and legally used in evidence-based promotions and scientific, technical, and medical (STM) research. Pools Press has excelled in the reprint market for more than 30 years. It provides professionally printed articles from medical and technical journals; prints booklets, catalogs, pamphlets, direct mail pieces and newsletters; and works with publishers who wish to outsource a portion of or all of their reprints business. TAAG offers printing, distribution and information logistics services, with core competencies in the professional production and distribution of clinical trial kits and clinical article reprints for the life sciences industry. 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. The Company assumes no obligation to update the cautionary information in this release.

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