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September 28, 2012

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Reprints Desk Parent Company Derycz Scientific Reports Record Revenue for Fiscal Year 2012

Derycz Scientific, Inc.
Fiscal Year 2012 Results Include: $43 Million in Annual Revenue; 7 Point Increase in Gross Profit as a Percentage of Revenue; US Operations Well Positioned for Profitability in Fiscal Year 2013
ENCINO, Calif., Sept. 28, 2012 /PRNewswire/ -- Derycz Scientific, Inc. (OTC: 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 fiscal year 2012 (ended June 30, 2012).
Year-over-year highlights:
$43 million of revenue in fiscal year 2012, a 28% increase over fiscal year 2011 revenue of $33.5 million
18.8% gross profit as a percentage of revenue in fiscal year 2012,  a 7 point increase over fiscal year 2011 gross profit as a percentage of revenue of 11.7%
Over 10 million articles delivered worldwide to over 1,000 accounts in more than 100 countries during fiscal year 2012
Total of $2.5M in one-time impairment charges in fiscal year 2012 related to the acquisition of TAAG, Pools Press, and intellectual property licenses
US Operations well positioned for profitability in fiscal year 2013 due to numerous gross margin improvements and expense reduction measures performed during the year
Current guidance of approximately $1M in adjusted EBITDA from US operations expected in fiscal year 2013
Management Commentary
"We can't be more excited about our growth.  We delivered over 10 million scientific articles to over 1,000 accounts in more than 100 countries, which proves that what we are doing makes sense, a lot of sense, all over the world.  It also proves that we have the team, systems and resources to scale and deliver solid solutions to organizations of any size anywhere in the world.   The task ahead for us really lies in continuing to grow the customer base worldwide while continuing to innovate in the products and services we develop.  Our main goal is customer happiness, and we delivered on that goal while at the same time dramatically improving our gross margins, reducing our operating expenses, continuing to innovate with new products and services for our global customers as well as improve our cash position.  We expect our US operations to deliver approximately $1M in adjusted EBITDA for fiscal year 2013, which is approximately a $3 million improvement compared to fiscal year 2012," said Derycz Scientific President and CEO Peter Derycz.  "In contrast to the success of our US operations (mainly the Reprints Desk brand), we've experienced continued difficulties in our TAAG operation. We have responded there by replacing the prior executive and accounting management as well as taking a one-time impairment charge in regards to that acquisition."
Alan Urban, Chief Financial Officer, added "About half way through fiscal year 2012 we completed numerous improvements in gross margin and as a result gross margin as a percentage of revenue increased 7 points to 18.8% for fiscal year 2012.  This improvement, along with our ongoing initiatives related to expense reduction and optimization of business processes, and with the impairment charges related to the acquisition of TAAG, Pools Press, and intellectual property licenses behind us, leaves us well positioned for profitability from US operations going forward."
Conference Call
Derycz Scientific management will host an investment-community conference call on Tuesday, October 2, 2012 beginning at 4:15 p.m. Eastern time (1:15 p.m. Pacific time) to discuss these results and answer questions. To participate in the call please dial             +1 (866) 516-3002       for domestic callers or             +1 (253) 237-1159       for international callers, and enter passcode 36492176 when prompted.
The webcast will also be available from the Company's website 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.


 
(Table amounts in 000's)
US
Operations
Year Ended 
June 30,
2012
TAAG
(France)
Year Ended
June 30,
2012
Total
Year Ended
June 30,
2012
Loss from operations
$  (3,602)
$  (3,050)
$  (6,652)
Add:
   Depreciation and amortization
437
1,092
1,529
 Stock-based compensation
204
-
204
Impairment charges
911
1,603
2,514
Loss from operations before depreciation and amortization, stock-based compensation, and impairment charges
$ (2,050)
$ (355)
$ (2,405)
 
 
 
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 September 28, 2012 in its Annual Report on Form 10-K for the year ended June 30, 2012. The Annual Report can be viewed at www.sec.gov.
Derycz Scientific, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30,
June 30,
2012
2011
Assets
Current assets:
Cash and cash equivalents
$ 3,150,978
$ 2,868,260
Accounts receivable:
Trade receivables, net of allowance of $163,455 and $223,298 , respectively
6,099,471
6,690,662
Due from factor
197,039
356,540
Inventory
363,641
759,507
Prepaid expenses
157,139
298,927
Prepaid royalties
415,339
1,245,872
Other current assets
18,084
18,320
Total current assets
10,401,691
12,238,088
Property and equipment, net of accumulated depreciation of $1,369,782 and $724,004 , respectively
1,294,517
1,666,462
Intangible assets, net of accumulated amortization of $189,783 and $641,698 , respectively
65,510
1,883,660
Goodwill
-
1,567,604
Deposits and other assets
244,202
308,721
Total assets
$ 12,005,920
$ 17,664,535
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
Accounts payable and accrued expenses
$ 9,554,754
$ 7,045,535
Capital lease obligations, current
640,116
663,973
Notes payable, current
53,452
53,252
Due to factor
256,636
312,440
Due to related parties
-
71,902
Line of credit
1,000,000
1,436,233
Deferred revenue
68,901
158,240
Total current liabilities
11,573,859
9,741,575
Notes payable, long term
53,452
110,080
Capital lease obligations, long term
813,173
1,281,600
Liability for estimated earnout
-
359,338
Deferred tax liability
-
350,000
Total liabilities
12,440,484
11,842,593
Commitments and contingencies
Stockholders' equity (deficiency):
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)
60,654
(11,590)
Additional paid-in capital
13,671,873
13,468,580
Accumulated deficit
(14,184,160)
(7,651,871)
Total stockholders' equity (deficiency)
(434,564)
5,821,942
Total liabilities and stockholders' equity (deficiency)
$ 12,005,920
$ 17,664,535
 
 
Derycz Scientific, Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Loss
Years ended
June 30,
2012
2011
Revenue
$ 42,818,541
$ 33,500,438
Cost of revenue
34,778,307
29,594,012
Gross profit
8,040,234
3,906,426
Operating expenses:
Selling, general and administrative
10,722,321
8,489,430
Depreciation and amortization
1,456,130
673,881
Impairment loss related to the acquisition of TAAG
1,602,638
-
Impairment loss on intangible assets related to intellectual property licenses
688,138
-
Impairment loss related to the acquisition of Pools Press
223,385
-
Total operating expenses
14,692,612
9,163,311
Loss from operations
(6,652,378)
(5,256,885)
Currency loss
(2,892)
(23,363)
Loss on sale of fixed asset
(315)
-
Other income
20,476
13,480
Interest expense
(220,665)
(144,069)
Interest income
1,379
3,231
Loss before provision for income taxes
(6,854,395)
(5,407,606)
Income tax benefit
322,106
-
Net loss
(6,532,289)
(5,407,606)
Other comprehensive income (loss):
Foreign currency translation
72,244
(11,590)
Comprehensive loss
$ (6,460,045)
$ (5,419,196)
Net loss per share:
Basic and diluted
$       (0.38)
$       (0.36)
Weighted average shares outstanding:
Basic and diluted
17,045,824
14,964,504
 
 
 
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Derycz Scientific, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Deficiency)
For the Years Ended June 30, 2012 and 2011
Additional
Other
Total
Common Stock
Paid-in
Accumulated
Noncontrolling
Comprehensive
Stockholders'
Shares
Amount
Capital
Deficit
Interest
Income
Equity
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
Fair value of options issued to employees
-
-
175,951
-
-
-
175,951
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
-
-
-
(6,532,289)
-
-
(6,532,289)
Foreign currency translation
-
-
-
-
-
72,244
72,244
Balance, June 30, 2012
17,069,437
$  17,069
$ 13,671,873
$ (14,184,160)
$     -
$  60,654
$  (434,564)
 
 
Derycz Scientific, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended
June 30,
2012
2011
Cash flow from operating activities:
Net loss
$ (6,532,289)
$ (5,407,606)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
1,529,222
750,190
Fair value of vested stock options
175,951
121,643
Fair value of warrants issued for services, net of adjustment
(237,126)
1,296,726
Fair value of common shares issued for services
-
76,123
Fair value of warrant extensions 
264,714
-
Impairment loss related to the acquisition of TAAG
1,602,638
-
Impairment loss on intangible assets related to intellectual property licenses
688,138
-
Impairment loss related to the acquisition of Pools Press
223,385
-
Deferred income tax liability
(350,000)
-
Loss on sale of fixed asset
315
-
Changes in assets and liabilities:
Accounts receivable
591,191
(167,479)
Inventory
395,866
130,792
Due from factor
159,501
(71,932)
Prepaid expenses
141,788
(68,339)
Prepaid royalties
830,533
(531,585)
Other assets
64,755
(2,562)
Accounts payable and accrued expenses
2,509,219
(922,159)
Deferred revenue and other current liabilities
(89,339)
(296,233)
Income taxes payable
-
(600)
Net cash provided by (used in) operating activities
1,968,462
(5,093,021)
Cash flow from investing activities:
Purchase of property and equipment
(183,108)
(121,058)
Purchase of intangible assets
(227,599)
(245,925)
Cash acquired upon acquisition of TAAG
-
325,383
Acquisition of remaining interest in Pools Press
-
(120,000)
Proceeds from sale of fixed asset
750
-
Net cash used in investing activities
(409,957)
(161,600)
Cash flow from financing activities:
Issuance of shares upon exercise of warrants
-
2,484,187
Issuance of common shares and warrants
-
2,784,032
Advances (payments) to factor
256,636
-
Payment of notes payable
(56,428)
-
Payment of bank loans
-
(277,892)
Payment of capital lease obligations
(868,006)
(144,320)
Payment of related parties
(71,902)
-
Advances (payments) under line of credit
(748,673)
1,436,233
Net cash provided by (used in) financing activities
(1,488,373)
6,282,240
Effect of exchange rate changes
212,586
(11,590)
Net increase in cash and cash equivalents
282,718
1,016,029
Cash and cash equivalents, beginning of period
2,868,260
1,852,231
Cash and cash equivalents, end of period
$ 3,150,978
$ 2,868,260
 
 
Derycz Scientific, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Years Ended
June 30,
2012
2011
Supplemental disclosures of cash flow information:
Cash paid for income taxes
$  27,894
$     -
Cash paid for interest
$ 220,665
$ 146,206
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 incurred for purchase of equipment
$ 375,722
$     -
Grant of common shares for acquisition
$     -
$ 1,212,195
Liability of estimated earnout
$     -
$ 359,338
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.  Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability.  The Company assumes no obligation to update the cautionary information in this release.
SOURCE Derycz Scientific, Inc.

Fiscal Year 2012 Results Include: $43 Million in Annual Revenue; 7 Point Increase in Gross Profit as a Percentage of Revenue; US Operations Well Positioned for Profitability in Fiscal Year 2013


ENCINO, Calif., Sept. 28, 2012 /PRNewswire/ -- Derycz Scientific, Inc. (OTC: 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 fiscal year 2012 (ended June 30, 2012).

Year-over-year highlights:

  • $43 million of revenue in fiscal year 2012, a 28% increase over fiscal year 2011 revenue of $33.5 million
  • 18.8% gross profit as a percentage of revenue in fiscal year 2012,  a 7 point increase over fiscal year 2011 gross profit as a percentage of revenue of 11.7%
  • Over 10 million articles delivered worldwide to over 1,000 accounts in more than 100 countries during fiscal year 2012
  • Total of $2.5M in one-time impairment charges in fiscal year 2012 related to the acquisition of TAAG, Pools Press, and intellectual property licenses
  • US Operations well positioned for profitability in fiscal year 2013 due to numerous gross margin improvements and expense reduction measures performed during the year
  • Current guidance of approximately $1M in adjusted EBITDA from US operations expected in fiscal year 2013

Management Commentary

"We can't be more excited about our growth.  We delivered over 10 million scientific articles to over 1,000 accounts in more than 100 countries, which proves that what we are doing makes sense, a lot of sense, all over the world.  It also proves that we have the team, systems and resources to scale and deliver solid solutions to organizations of any size anywhere in the world.   The task ahead for us really lies in continuing to grow the customer base worldwide while continuing to innovate in the products and services we develop.  Our main goal is customer happiness, and we delivered on that goal while at the same time dramatically improving our gross margins, reducing our operating expenses, continuing to innovate with new products and services for our global customers as well as improve our cash position.  We expect our US operations to deliver approximately $1M in adjusted EBITDA for fiscal year 2013, which is approximately a $3 million improvement compared to fiscal year 2012," said Derycz Scientific President and CEO Peter Derycz.  "In contrast to the success of our US operations (mainly the Reprints Desk brand), we've experienced continued difficulties in our TAAG operation. We have responded there by replacing the prior executive and accounting management as well as taking a one-time impairment charge in regards to that acquisition."

Alan Urban, Chief Financial Officer, added "About half way through fiscal year 2012 we completed numerous improvements in gross margin and as a result gross margin as a percentage of revenue increased 7 points to 18.8% for fiscal year 2012.  This improvement, along with our ongoing initiatives related to expense reduction and optimization of business processes, and with the impairment charges related to the acquisition of TAAG, Pools Press, and intellectual property licenses behind us, leaves us well positioned for profitability from US operations going forward."

Conference Call

Derycz Scientific management will host an investment-community conference call on Tuesday, October 2, 2012 beginning at 4:15 p.m. Eastern time (1:15 p.m. Pacific time) to discuss these results and answer questions. To participate in the call please dial +1 (866) 516-3002 for domestic callers or +1 (253) 237-1159 for international callers, and enter passcode 36492176 when prompted. The webcast will also be available from the Company's website 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.


Use of Non-GAAP Measure – Loss from Operations before Depreciation and Amortization, Stock-Based Compensation, and Impairment Charges


Derycz Scientific management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Income from operations before depreciation and amortization, stock-based compensation, and impairment charges. Management believes that this non-GAAP measure provides useful information about the Company's operating results.  The attached tables provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

Reconciliation of Loss from Operations before Depreciation and Amortization, Stock-Based Compensation, and Impairment Charges to Loss from Operations

 
 

 

 

 

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.  Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability.  The Company assumes no obligation to update the cautionary information in this release.

SOURCE Derycz Scientific, Inc.