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Derycz Scientific, Inc. Reports Quarterly Revenue Growth of 62% to $6.2 Million
2nd Consecutive Quarter of Net Profits

SANTA MONICA, Calif., May 13 /PRNewswire-FirstCall/ -- 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, released its financial results for the quarter and nine months ended March 31, 2010.

Financial and Operational Highlights for the quarter and nine months ended March 31, 2010, include:

  • Quarterly revenues increased 62% to $6.2 million in 2010 from $3.8 million in the same period 2009;
  • Nine-month revenue rose 77.8% to almost $18.6 million for the period ended March 31, 2010, from $10.4 million for the same period prior year;
  • Quarterly EPS of $0.01 represents Derycz's second consecutive profitable quarter;
  • Nine-month income reached $22,000, or $0.00 per fully diluted share, for the period ended March 31, 2010, against a net loss of $244,000, or $0.02 per fully diluted share in the nine months ended March 31, 2009;
  • Derycz Scientific's subsidiary, Reprints Desk, named among "100 Companies That Matter Most in Knowledge Management" by KMWorld Magazine for the second consecutive year; and
  • Derycz Scientific was featured in Pharmaceutical Manufacturing and Genetic Engineering and in Biotechnology News in articles on streamlining the FDA approval process.

Peter Derycz, President and CEO of Derycz Scientific, commented: "We are very pleased with our second consecutive profitable quarter.  Our revenue growth is very healthy, and we believe it will continue along this trajectory.  The Reprints Desk subsidiary is doing well, and the Pools Press subsidiary is solidly performing in its niche.  We anticipate that our fourth quarter results will continue along the current path of top- and bottom-line growth."

Quarterly Results of Operations

Our revenues increased 62% compared to the same period in 2009. We achieved revenue of $6,201,431 for the three months ended March 31, 2010, compared to revenue of $3,818,500 for the three months ended March 31, 2009.

Our general and administrative expenses increased 30% from $826,770 for the three months ended March 31, 2009 to $1,154,177 for the three months ended March 31, 2010. Pools' share of these expenses was approximately $52,000 for the 2010 period and $49,000 in the 2009 period. These expenses include Reprints' salary costs, which were $657,494 in the 2010 period and $499,099 in the 2009 period, an increase of $158,395 or 32%. Both our sales and marketing team and our information technology team have increased during the past year and we have added other additional employees as needed.  We continue to attempt to contain the expansion of our workforce. However, because of the expansion of our sales volume and in order to continue to develop our computer system, we expect to add a small number of new employees in the next year.

We recorded net income of $123,640 for the three months ended March 31, 2009 compared to net income of $93,705 for the three months ended March 31, 2010.

Mr. Derycz said, "We are proud to report two consecutive quarters of profitability.  This result is attributable to strong sales at Reprints during the 2010 period.  We hope to continue to be modestly profitable for the remainder of the 2010 fiscal year."

Nine-Month Results of Operations

Our revenues increased significantly from the same period in 2009. We achieved revenue of $18,575,589 for the nine months ended March 31, 2010, compared to revenue of $10,448,179 for the nine months ended March 31, 2009, an increase of 78%.

Our general and administrative expenses increased 38% from $2,409,883 for the nine months ended March 31, 2009 to $3,333,872 for the nine months ended March 31, 2010. Pools' share of these expenses was approximately $174,000 in the 2009 period and $166,000 during the 2010 period. These expenses include Reprints' salary costs, which were $1,352,533 in the 2009 period and $1,911,565 in the 2010 period, an increase of $559,032 or 41%.  These costs have increased at a slower rate than our revenues as we have tried to limit our hiring of new employees and to contain other costs.

As a result of the foregoing, Derycz recorded net income of $16,288 for the nine months ended March 31, 2010 compared to a net loss of $243,492 for the nine months ended March 31, 2009.

As of March 31, 2010, the Company had cash and cash equivalents of $2,248,767, compared to $1,854,093 as of March 31, 2009. This increase is primarily attributable to an increase in accounts payable of $1,020,733 and a decrease in prepaid royalties of $182,210, partially offset by an increase in accounts receivable of $638,611.  The Company believes that its current cash resources will be sufficient to sustain current operations for at least one year.

About Derycz Scientific®

Derycz Scientific, Inc. (the "Company") 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 and Pools Press. Reprints Desk offers a one-stop solution for reprints, ePrints and single articles, and has delivered millions of articles worldwide. Reprints Desk is an innovator in content retrieval and ePrint delivery and its services are designed to help make effective use of published articles in a copyright-compliant manner. Pools Press has excelled in the reprint market for over 30 years. It provides professionally printed articles from medical and technical journals; prints booklets, catalogs, pamphlets, direct mail pieces, newsletters, and all business stationery; and works with publishers who wish to outsource a portion of or all of their reprints business. For more information, go to www.deryczscientific.com

Forward-Looking Statements

As a cautionary note to investors, 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 technology and product development; the Company's ability to execute its business model and strategic plans; and all the risks and related information described from time to time in the Company's SEC filings, including the financial statements and related information contained in the Company's SEC Filing. The Company assumes no obligation to update the information in this release.

www.reprintsdesk.com

FINANCIAL TABLES TO FOLLOW

DERYCZ SCIENTIFIC, INC.

Condensed Consolidated Statement of Operations

(unaudited)






Three Months Ended





March 31,





2010


2009













NET SALES


$

6,201,431

$

3,818,500








COST OF SALES


4,843,169


2,802,344








GROSS PROFIT


1,358,262


1,016,156















OPERATING EXPENSES:






General and administrative


1,154,177


826,770


Marketing and advertising


60,222


33,267


Depreciation and amortization


52,523


58,517








TOTAL OPERATING EXPENSES


1,266,922


918,554








INCOME (LOSS) FROM OPERATIONS


91,340


97,602








Realized gain on marketable securities


-


60,833

Other income



6,101


-

Interest expense


(1,955)


(1,753)

Interest income


1,273


2,709








INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST


96,759


159,391








PROVISION FOR INCOME TAXES


(3,054)


(35,751)








INCOME (LOSS) BEFORE NONCONTROLLING INTEREST


93,705


123,640








NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST


4,456


(2,823)








NET INCOME (LOSS) ATTRIBUTABLE TO DERYCZ SCIENTIFIC, INC.

$

98,161

$

120,817








NET INCOME (LOSS) PER SHARE:






BASIC AND DILUTED

$

0.01

$

0.01








WEIGHTED AVERAGE SHARES OUTSTANDING:






BASIC AND DILUTED


12,961,830


12,961,830




DERYCZ SCIENTIFIC, INC.

Condensed Consolidated Statement of Operations

(unaudited)







Nine Months Ended






March 31,






2010


2009

















NET SALES



$

18,575,589

$

10,448,179









COST OF SALES



14,965,411


8,030,463









GROSS PROFIT



3,610,178


2,417,716

















OPERATING EXPENSES:







General and administrative



3,333,872


2,409,883


Marketing and advertising



123,788


71,855


Depreciation and amortization



151,017


190,416









TOTAL OPERATING EXPENSES



3,608,677


2,672,154









INCOME (LOSS) FROM OPERATIONS



1,501


(254,438)









Realized gain on marketable securities



-


33,668

Other income




19,361


-

Interest expense



(5,098)


(32,853)

Interest income



3,578


34,469









INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST



19,342


(219,154)









PROVISION FOR INCOME TAXES



(3,054)


(24,338)









INCOME (LOSS) BEFORE NONCONTROLLING INTEREST



16,288


(243,492)









NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST



5,914


(534)









NET INCOME (LOSS) ATTRIBUTABLE TO DERYCZ SCIENTIFIC, INC.


$

22,202

$

(244,026)









NET INCOME (LOSS) PER SHARE:







BASIC AND DILUTED


$

0.00

$

(0.02)









WEIGHTED AVERAGE SHARES OUTSTANDING:







BASIC AND DILUTED



12,961,830


12,939,607




DERYCZ SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets









March 31,


June 30,








2010


2009








(unaudited)



ASSETS















CURRENT ASSETS








Cash and cash equivalents



$

2,248,767

$

1,854,093


Accounts receivable, net of allowance of $35,000



4,138,459


3,499,848


Inventory





9,992


10,188


Prepaid royalties




35,770


217,980


Other current assets




81,735


37,890











TOTAL CURRENT ASSETS




6,514,723


5,619,999











PROPERTY AND EQUIPMENT, net of








accumulated depreciation of $281,052 and  $188,266



363,860


340,776











INTANGIBLE ASSETS








Customer lists, net of accumulated

amortization of $0 and $43,056


-


6,944


Intellectual property licenses, net of

amortization of $259,086 and $163,209

712,681


600,887











GOODWILL





223,385


223,385











TOTAL ASSETS




$

7,814,649

$

6,791,991




DERYCZ SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets

(Continued)









March 31,


June 30,








2010


2009








(unaudited)



LIABILITIES AND STOCKHOLDERS' EQUITY















CURRENT LIABILITIES








Accounts payable



$

4,057,348

$

3,036,615


Capital lease obligation, current




33,008


17,861


Income tax payable




3,054


3,659


Other current liabilities




75,989


116,769

TOTAL CURRENT LIABILITIES




4,169,399


3,174,904











CAPITAL LEASE OBLIGATIONS




52,191


43,617











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; 12,961,830 shares issued and outstanding



12,962


12,962


Additional paid-in capital




5,453,524


5,450,223


Accumulated deficit




(1,914,870)


(1,937,072)











TOTAL STOCKHOLDERS' EQUITY




3,551,616


3,526,113











NONCONTROLLING INTEREST




41,443


47,357











TOTAL EQUITY




3,593,059


3,573,470











TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

7,814,649

$

6,791,991




SOURCE Derycz Scientific, Inc.