Organization, Nature of Business and Basis of Presentation

3 Months Ended

Sep. 30, 2011

Organization, Nature of Business and Basis of Presentation

Note 1 — Organization, Nature of Business and Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2011.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

(a) Organization

Derycz Scientific, Inc. was incorporated in the State of Nevada on November 2, 2006.  Derycz Scientific is a publicly traded holding company with three wholly owned subsidiaries, Reprints Desk, Inc., a Delaware corporation (“Reprints” or “Reprints Desk”), Techniques Appliquées aux Arts Graphiques, S.p.A., an entity organized under the laws of France (“TAAG”), and Pools Press, Inc., an Illinois corporation (“Pools” or “Pools Press”).

(b) Nature of business

Reprints is a content repurposing and rights management company, with a focus on content re-use services and products. TAAG, our French subsidiary, in addition to supplementing the operations of the Company, also provides additional printing and logistics services to its customers in Europe.  The Company operates within the periodicals publishing industry which is a large and growing market. The Company has developed products in the following areas:

• Reprints, ePrints and Article Distribution Systems

• Commercial Printing Services

• Publisher Outsourced Reprint Management

• Print-on-Demand Services for copyright and regulatory sensitive documents

(c) Basis of Presentation

The accompanying financial statements are consolidated and include the accounts of the Company and its wholly owned subsidiaries. The consolidated accounts include 100% of the assets and liabilities of our majority owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

(d) Liquidity

For the three months ended September 30, 2011, the Company recorded a net loss of $1,691,565.  Cash provided by operating activities was $821,602. As of September 30, 2011, the Company had working capital of $1,175,701 and shareholders’ equity of $4,052,879. The Company believes that its current cash resources and cash flow from operations will be sufficient to sustain current operations for the next twelve months. The Company plans on instituting expense reduction measures and reviewing the financial terms of its relationships with significant vendors and customers to reduce its net losses and increase its cash flow from operations.  In addition, the Company plans to raise additional funds for general working capital purposes in the next twelve months through equity or debt financings or by other means to support its operations and fund growth initiatives.  The Company can provide no assurances, however, that such financing will be available in an amount or on terms acceptable to the Company, if at all. The sale of additional equity or debt securities would result in dilution to its shareholders.  The issuance of additional debt would result in increased expenses and could subject the Company to covenants that may have the effect of restricting its operations.