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November 15, 2010

Reprints Desk's Parent Company Derycz Scientific First Quarter Results Feature 26% Revenue Growth

Derycz Scientific, Inc.

SANTA MONICA, Calif., Nov. 15, 2010 /PRNewswire-FirstCall/ -- Derycz Scientific, Inc. (OTC Bulletin Board: DYSC), a company 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 three months ended September 30, 2010.

Revenues for the first quarter of fiscal 2011 increased 26% to $6.0 million from $4.8 million for the first quarter of fiscal 2010.  Revenue from the Reprints Desk subsidiary increased 31% to $5.3 million from $4.0 million for the prior year period, while revenue from the Pools Press subsidiary decreased slightly to $750,379 from $758,032 for the first quarter of fiscal 2010.

Cost of goods sold increased 28% during the first quarter of fiscal 2011 compared with the prior year period, which is roughly in-line with revenue growth. Gross margin was 14%, compared with 15% for the prior year period.

General and administration expenses for quarter ended September 30, 2010 increased 9% to $1.0 million compared with $945,433 for the quarter ended September 30, 2009.  The increase was due to higher expenses from Reprints Desk, including increases in sales and marketing, information technology and accounting personnel.  Marketing and advertising expenses for the first quarter of the current fiscal year of $114,526 compare with $38,453 for the prior year period, with the increase due to expanded marketing efforts.

Derycz Scientific reported a net loss of $405,269 or $0.03 per share for the three months ended September 30, 2010, compared with a net loss of $310,691 or $0.02 per share for the three months ended September 30, 2009.
The company had cash and cash equivalent of $2.0 million as of September 30, 2010, compared with $1.9 million as of June 30, 2010.

"We are reporting another quarter of substantial revenue growth, which we attribute to our expanded customer base and publisher agreements, and additions to our technology solutions," said Peter Derycz, president and CEO of Derycz Scientific. "We are pleased that approximately 9% of first quarter revenues came from first-time customers.

"We expect sales increases in fiscal 2011, resulting from current customers spending more on existing products and services, as well as the addition of new customers and new solutions.  Among recent achievements, today we announced an expanded board of directors and the appointment of three independent directors giving the company a majority of independent directors and positioning the company's stock to eventually trade on an exchange such as NASDAQ.

"To support continued revenue growth we are aggressively bundling and pricing our products and services, which is impacting gross margin.  We see this strategy as an avenue for building our customer base as we concurrently pursue strategies to increase margins," he added.

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 wholly owned 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 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.  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; 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.

Derycz Scientific, Inc.

 

Condensed Consolidated Statements of Operations

 

(unaudited)

 
 

Three Months Ended

 
 

September 30,

 
 

2010

2009

 
       
       

NET SALES

$6,016,656

$4,783,699

 
       

COST OF SALES

5,199,811

4,067,395

 
       

GROSS PROFIT

816,845

716,304

 
       

OPERATING EXPENSES:

     

 General and administrative

1,033,497

945,433

 

 Marketing and advertising

114,526

38,453

 

 Depreciation and amortization

59,550

49,573

 
       

TOTAL OPERATING EXPENSES

1,207,573

1,033,459

 
       

LOSS FROM OPERATIONS

(390,728)

(317,155)

 
       

Other Income

-

1,069

 

Interest expense

(15,150)

(1,539)

 

Interest income

609

1,549

 
       

NET LOSS BEFORE NONCONTROLLING INTEREST

(405,269)

(316,076)

 
       

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

-

5,385

 
       

NET LOSS ATTRIBUTABLE TO DERYCZ SCIENTIFIC, INC.

$(405,269)

$(310,691)

 
       

NET LOSS PER SHARE:

     

 BASIC AND DILUTED

$(0.03)

$(0.02)

 
       

WEIGHTED AVERAGE SHARES OUTSTANDING:

     

 BASIC AND DILUTED

13,011,527

12,961,830