TechWeb

Derycz Scientific Reports Record Revenue for Fiscal Year 2012

Sep 28, 2012 (03:09 PM EDT)
URL: http://www.techweb.com/show-press-release/X925309/derycz-scientific-reports-record-revenue-for-fiscal-year-2012.html

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


(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

 

 

 

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.