Derycz Scientific Reports Record Revenue for Third Quarter 2012
Results Include $251 Thousand in Third Quarter Income from Operations before Depreciation and Amortization, Stock-Based Compensation, and Impairment Charges
ENCINO, Calif., May 15, 2012 /PRNewswire/ -- Derycz Scientific, Inc. (OTCBB: 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 third quarter of its fiscal year 2012 (quarter ended March 31, 2012).
Third Quarter highlights:
- $251,000 in third quarter income from operations before depreciation and amortization, stock-based compensation, and impairment charges
- Social, Mobile, and Search tools fully launched, and first sales completed.
- Total of $2.3M in one-time impairment charges related to the acquisition of TAAG and intellectual property licenses
Third Quarter year-over-year highlights:
- Gross profit as a percentage of revenue increased to 22.5% from 8.7% in 2011
- 31% increase in total revenue to $10 million from $7.6 million in 2011 third quarter
Management Commentary
"We've continued to experience positive growth, and are extremely excited about the fact that our main operating company, Reprints Desk, now has positive income from operations before adjustments. Income may be lifted even further as we roll out new high margin Software-as-a-Service (SaaS) offerings, Bibliogo and Article Viewer mobile app as part of our Article Galaxy platform. Additionally, we've had recent top pharma company wins that should bring an additional ten million dollars in revenues over the next year," said Derycz Scientific President and CEO Peter Derycz. "In contrast to our Reprints Desk success, we've experienced difficulties in our TAAG operation. We have responded there by instituting a management change that will be bringing a "hands-on" approach to revenue growth and operational efficiencies as well as by taking a one-time impairment charge in regards to that acquisition."
Alan Urban, Chief Financial Officer, added, "As mentioned last quarter, we completed numerous improvements in gross margin and operating expenses and as a result gross margin as a percentage of revenue increased to 22.5% and we achieved $251 thousand of income from operations before depreciation and amortization, stock-based compensation, and impairment charges. In addition, with the impairment charges related to the acquisition of TAAG and intellectual property licenses behind us, we are well positioned for profitability going forward."
Conference Call
Derycz Scientific management will host an investment-community conference call on Wednesday, May 16, 2012 beginning at 2:00 p.m. Eastern time (11:00 a.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 82552156 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 – Income 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 Income from Operations before Depreciation and Amortization, Stock-Based Compensation, and Impairment Charges to Loss from Operations
(Table amounts in 000's)
|
||||||||||||
| US Operations |
TAAG (France) Q3 Fiscal Year 2012 |
Total Q3 Fiscal |
||||||||||
| Loss from operations |
$ |
(508) |
$ |
(1,936) |
$ |
(2,444) |
||||||
| Add: |
||||||||||||
| Depreciation and amortization |
110 |
249 |
359 |
|||||||||
| Stock-based compensation |
45 |
- |
45 |
|||||||||
| Impairment charges |
688 |
1,603 |
2,291 |
|||||||||
| Income from operations before depreciation and amortization, stock-based compensation, and impairment charges |
$ |
335 |
$ |
(84) |
$ |
251 |
||||||
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 May 15, 2012 in its Quarterly Report on Form 10-Q for the period ended March 31, 2012. The Quarterly Report can be viewed at www.sec.gov.
|
Derycz Scientific, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
|
||||||||
| March 31, |
June 30, |
|||||||
| 2012 |
2011 |
|||||||
| (unaudited) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
3,245,809 |
$ |
2,868,260 |
||||
| Accounts receivable: |
||||||||
| Trade receivables, net of allowance of $170,695 and $223,298 , respectively |
6,984,122 |
6,690,662 |
||||||
| Due from factor |
252,104 |
356,540 |
||||||
| Inventory |
637,660 |
759,507 |
||||||
| Prepaid expenses |
279,979 |
298,927 |
||||||
| Prepaid royalties |
232,063 |
1,245,872 |
||||||
| Other current assets |
908 |
18,320 |
||||||
| Total current assets |
11,632,645 |
12,238,088 |
||||||
| Property and equipment, net of accumulated depreciation of $1,354,303 and $724,004 , respectively |
979,032 |
1,666,462 |
||||||
| Intangible Assets, net of accumulated amortization of $133,076 and $641,698 , respectively |
83,578 |
1,883,660 |
||||||
| Goodwill |
223,385 |
1,567,604 |
||||||
| Deposits and other assets |
277,684 |
308,721 |
||||||
| Total assets |
$ |
13,196,324 |
$ |
17,664,535 |
||||
| Liabilities and Stockholders' Equity |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ |
9,440,805 |
$ |
7,045,535 |
||||
| Capital lease obligation, current |
592,333 |
663,973 |
||||||
| Notes payable, current |
56,691 |
53,252 |
||||||
| Due to factor |
323,389 |
312,440 |
||||||
| Due to related parties |
- |
71,902 |
||||||
| Line of credit |
1,350,000 |
1,436,233 |
||||||
| Deferred revenue |
218,362 |
158,240 |
||||||
| Total current liabilities |
11,981,580 |
9,741,575 |
||||||
| Notes payable, long term |
68,029 |
110,080 |
||||||
| Capital lease obligation, long term |
741,651 |
1,281,600 |
||||||
| Liability for estimated earnout |
- |
359,338 |
||||||
| Deferred tax liability |
- |
350,000 |
||||||
| Total liabilities |
12,791,260 |
11,842,593 |
||||||
| 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; 17,069,437 and 16,822,509 shares issued and outstanding, respectively |
17,069 |
16,823 |
||||||
| Accumulated other comprehensive income (loss) |
12,605 |
(11,590) |
||||||
| Additional paid-in capital |
13,625,240 |
13,468,580 |
||||||
| Accumulated deficit |
(13,249,850) |
(7,651,871) |
||||||
| Total stockholders' equity |
405,064 |
5,821,942 |
||||||
| Total liabilities and stockholders' equity |
$ |
13,196,324 |
$ |
17,664,535 |
||||
|
Derycz Scientific, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited)
|
||||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| March 31, |
March 31, |
|||||||||||||||
| 2012 |
2011 |
2012 |
2011 |
|||||||||||||
| Revenue |
$ |
9,986,862 |
$ |
7,628,334 |
$ |
31,937,600 |
$ |
22,156,368 |
||||||||
| Cost of revenue |
7,743,917 |
6,967,975 |
26,442,918 |
20,112,574 |
||||||||||||
| Gross profit |
2,242,945 |
660,359 |
5,494,682 |
2,043,794 |
||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling, general and administrative |
2,037,231 |
2,084,618 |
7,668,062 |
5,000,134 |
||||||||||||
| Depreciation and amortization |
359,220 |
63,207 |
1,325,315 |
189,132 |
||||||||||||
| Impairment loss related to the acquisition |
1,602,638 |
- |
1,602,638 |
- |
||||||||||||
| Impairment loss on intangible assets related to intellectual property licenses |
688,138 |
- |
688,138 |
- |
||||||||||||
| Total operating expenses |
4,687,227 |
2,147,825 |
11,284,153 |
5,189,266 |
||||||||||||
| Loss from operations |
(2,444,282) |
(1,487,466) |
(5,789,471) |
(3,145,472) |
||||||||||||
| Currency gain (loss) |
(690) |
(9,313) |
(2,397) |
(9,313) |
||||||||||||
| Other income |
4,050 |
- |
23,903 |
(3,775) |
||||||||||||
| Interest expense |
(38,457) |
(24,817) |
(161,470) |
(73,475) |
||||||||||||
| Interest income |
361 |
949 |
1,085 |
2,684 |
||||||||||||
| Loss before provision for income taxes |
(2,479,018) |
(1,520,647) |
(5,928,350) |
(3,229,351) |
||||||||||||
| Income tax benefit |
350,000 |
- |
330,371 |
- |
||||||||||||
| Net loss |
(2,129,018) |
(1,520,647) |
(5,597,979) |
(3,229,351) |
||||||||||||
| Other comprehensive income: Foreign currency translation |
(9,745) |
- |
24,195 |
- |
||||||||||||
| Comprehensive loss |
$ |
(2,138,763) |
$ |
(1,520,647) |
$ |
(5,573,784) |
$ |
(3,229,351) |
||||||||
| Net loss per share: |
||||||||||||||||
| Basic and diluted |
$ |
(0.12) |
$ |
(0.10) |
$ |
(0.33) |
$ |
(0.23) |
||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic and diluted |
17,069,437 |
15,866,221 |
17,038,010 |
14,345,169 |
||||||||||||
|
Derycz Scientific, Inc. and Subsidiaries Condensed Consolidated Statement of Stockholders' Equity For the Nine Months Ended March 31, 2012 (Unaudited)
|
||||||||||||||||||||||||
| Common Stock |
Additional |
Accumulated |
Other Comprehensive |
Total Stockholders' |
||||||||||||||||||||
| Shares |
Amount |
Capital |
Deficit |
Income |
Equity |
|||||||||||||||||||
| Balance, July 1, 2011 |
16,822,509 |
$ |
16,823 |
$ |
13,468,580 |
$ |
(7,651,871) |
$ |
(11,590) |
$ |
5,821,942 |
|||||||||||||
| Fair value of options issued to employees |
- |
- |
129,318 |
- |
129,318 |
|||||||||||||||||||
| 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 |
(5,597,979) |
(5,597,979) |
||||||||||||||||||||||
| Foreign currency translation |
24,195 |
24,195 |
||||||||||||||||||||||
| Balance, March 31, 2012 |
17,069,437 |
$ |
17,069 |
$ |
13,625,240 |
$ |
(13,249,850) |
$ |
12,605 |
$ |
405,064 |
|||||||||||||
|
Derycz Scientific, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
| Nine Months ended |
||||||||
| March 31, |
||||||||
| 2012 |
2011 |
|||||||
| Cash flow from operating activities: |
||||||||
| Net loss |
$ |
(5,597,979) |
$ |
(3,229,351) |
||||
| Adjustment to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
1,378,984 |
244,243 |
||||||
| Fair value of vested stock options |
129,318 |
84,559 |
||||||
| Fair value of warrants issued for services, net of adjustment |
(237,126) |
1,067,467 |
||||||
| 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 |
- |
||||||
| Deferred income tax liability |
(350,000) |
- |
||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(293,459) |
(1,876,631) |
||||||
| Inventory |
121,847 |
(8,779) |
||||||
| Due from factor |
104,436 |
- |
||||||
| Prepaid expenses |
18,948 |
(370,217) |
||||||
| Prepaid royalties |
1,013,809 |
- |
||||||
| Other assets |
48,449 |
15,735 |
||||||
| Accounts payable and accrued expenses |
2,395,269 |
(960,559) |
||||||
| Other current liabilities |
60,122 |
102,293 |
||||||
| Income taxes payable |
- |
(600) |
||||||
| Net cash provided by (used in) operating activities |
1,348,108 |
(4,855,717) |
||||||
| Cash flow from investing activities: |
||||||||
| Purchase of property and equipment |
(60,961) |
(83,312) |
||||||
| Purchase of intangible assets |
(188,960) |
(98,998) |
||||||
| Cash acquired upon acquisition of TAAG |
- |
645,688 |
||||||
| Acquisition of remaining interest in Pools Press |
- |
(120,000) |
||||||
| Net cash provided by (used in) investing activities |
(249,921) |
343,378 |
||||||
| 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 |
10,949 |
|||||||
| Payment of notes payable |
(38,612) |
- |
||||||
| Payment of capital lease obligation |
(611,589) |
(25,368) |
||||||
| Payment of related parties |
(71,902) |
- |
||||||
| Advances (payments) under line of credit |
(86,233) |
1,171,178 |
||||||
| Net cash provided by (used in) financing activities |
(797,387) |
6,414,029 |
||||||
| Effect of exchange rate changes |
76,749 |
- |
||||||
| Net increase in cash and cash equivalents |
377,549 |
1,901,690 |
||||||
| Cash and cash equivalents, beginning of period |
2,868,260 |
1,852,231 |
||||||
| Cash and cash equivalents, end of period |
$ |
3,245,809 |
$ |
3,753,921 |
||||
|
Derycz Scientific, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
| Nine Months ended |
||||||||
| March 31, |
||||||||
| 2012 |
2011 |
|||||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid for income taxes |
$ |
19,629 |
$ |
- |
||||
| Cash paid for interest |
$ |
161,470 |
$ |
73,475 |
||||
| 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 |
||||
| Grant of common shares for acquisition |
$ |
- |
$ |
1,212,195 |
||||
| Liability of estimated earnout |
$ |
- |
$ |
621,985 |
||||
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.
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