Derycz Scientific first quarter total revenue increases 64% to $9.9 million

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 Sciences and other research intensive industries, today reported financial and operating results for the first quarter of its fiscal year 2012 (quarter ended September 30, 2011).

• Fiscal year 2012 first quarter total revenue increased 64% to $9.9 million from $6.0 million in the fiscal year 2011 first quarter.  
• Fiscal year 2012 first quarter revenues of $3.1 million from the Company's recently acquired French subsidiary.
• Fiscal year 2012 first quarter revenues from US operations increased 13% to $6.8 million from $6.0 million in the fiscal year 2011 first quarter.
• New, higher margin, service offerings are anticipated to come next quarter

Management Commentary

"We continued to grow and are very excited about the new customers that have joined us.  Our new social, mobile and search tools will start coming on line in the second quarter.  These new, higher margin, offerings are tools that we expect will be well received by our existing customer base, and we expect they will also help us find new customers," said Peter Derycz, President and CEO.  He continues: "Acquiring customers and delighting them with best-in-class information logistics solutions is what we are all about."

Newly appointed CFO Alan Urban said, "We posted solid revenue gains despite an environment of continued economic weakness, particularly in Europe, where revenue from our recently acquired French subsidiary did not meet expectations.  While top line growth has been our priority, we now have to focus on profitability," added Mr. Urban.  "We plan on instituting expense reduction measures and reviewing the financial terms of our relationships with significant vendors and customers to reduce our losses and get on a path to profitability."

Both the Company's net income and Adjusted EBITDA were negatively affected in the amount of $710,749 by a GAAP accounting method which requires the Company to amortize Certain Publisher Guaranteed Payments ("CPGPs") on a straight-line basis over the life of the contracts, instead of accounting for them as a percentage of the revenue generated under the contracts. This accounting treatment results in higher amortized costs in the early periods of the agreements. For the three months ended September 30, 2011, we recorded approximately $697,465 in revenue under the CPGPs while amortizing approximately $1,303,594 of costs, which caused our cost of goods sold to increase significantly relative to the revenue levels and therefore significantly reducing our gross margin.