10-Q

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File No. 000-53501

DERYCZ SCIENTIFIC, INC.

(Exact name of registrant as specified in its charter)

Nevada	11-3797644
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5435 Balboa Blvd., Suite 202, Encino, California	91316
(Address of principal executive offices)	(Zip Code)

(310) 477-0354

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨   (Do not check if a smaller reporting company)	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Title of Class	Number of Shares Outstanding on February 2, 2013
Common Stock, $0.001 par value	17,269,525

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION	3
Item 1. Condensed Consolidated Financial Statements (unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	23
PART II — OTHER INFORMATION	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6. Exhibits	23
SIGNATURES	24

2

PART 1 — FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Derycz Scientific, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	December 31,			June 30,
	2012			2012
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,898,285		$	3,150,978
Accounts receivable:
Trade receivables, net of allowance of $194,353 and $163,455 , respectively		8,872,733			6,099,471
Due from factor		260,643			197,039
Inventory		351,923			363,641
Prepaid expenses		747,783			157,139
Prepaid royalties		401,560			415,339
Other current assets		4,034			18,084
Total current assets		13,536,961			10,401,691
Property and equipment, net of accumulated depreciation of $1,633,942 and $1,369,782 , respectively		1,123,800			1,294,517
Intangible Assets, net of accumulated amortization of $267,126 and $189,783 , respectively		143,075			65,510
Deposits and other assets		261,165			244,202
Total assets	$	15,065,001		$	12,005,920
Liabilities and Stockholders’ Deficiency
Current Liabilities:
Accounts payable and accrued expenses	$	13,231,979		$	9,554,754
Capital lease obligation, current		614,397			640,116
Notes payable, current		44,938			53,452
Due to factor		247,776			256,636
Line of credit		100,000			1,000,000
Deferred revenue		326,375			68,901
Total current liabilities		14,565,465			11,573,859
Notes payable, long term		33,703			53,452
Capital lease obligation, long term		576,047			813,173
Total liabilities		15,175,215			12,440,484
Commitments and contingencies
Stockholders’ 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; 17,269,525 and 17,069,437 shares issued and outstanding, respectively		17,269			17,069
Accumulated other comprehensive income (loss)		(4,596	)		60,654
Additional paid-in capital		13,936,987			13,671,873
Accumulated deficit		(14,059,874	)		(14,184,160	)
Total stockholders’ deficiency		(110,214	)		(434,564	)
Total liabilities and stockholders’ deficiency	$	15,065,001		$	12,005,920

See notes to condensed consolidated financial statements

3

Derycz Scientific, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2012			2011			2012			2011
Revenue	$	13,982,098		$	12,089,519		$	23,524,097		$	21,950,738
Cost of revenue		11,223,397			10,310,259			18,608,552			18,699,001
Gross profit		2,758,701			1,779,260			4,915,545			3,251,737
Operating expenses:
Selling, general and administrative		2,414,701			3,003,386			4,405,411			5,630,831
Depreciation and amortization		134,914			480,094			321,572			966,095
Total operating expenses		2,549,615			3,483,480			4,726,983			6,596,926
Income (loss) from operations		209,086			(1,704,220	)		188,562			(3,345,189	)
Gain on sale of fixed assets		-			-			6,879			-
Interest expense		(22,723	)		(71,319	)		(59,560	)		(123,013	)
Other income (expense)		(6,956	)		17,773			(9,914	)		18,870
Income (loss) before provision for income taxes		179,407			(1,757,766	)		125,967			(3,449,332	)
Provision for income taxes		(1,088	)		(19,629	)		(1,681	)		(19,629	)
Net income (loss)		178,319			(1,777,395	)		124,286			(3,468,961	)
Other comprehensive income (loss):
Foreign currency translation		(37,603	)		14,337			(65,250	)		33,940
Comprehensive income (loss)	$	140,716		$	(1,763,058	)	$	59,036		$	(3,435,021	)
Net income (loss) per share:
Basic	$	0.01		$	(0.10	)	$	0.01		$	(0.20	)
Diluted	$	0.01		$	(0.10	)	$	0.01		$	(0.20	)
Weighted average shares outstanding:
Basic		17,208,117			17,069,437			17,145,856			17,022,467
Diluted		17,208,117			17,069,437			17,175,663			17,022,467

See notes to condensed consolidated financial statements

4

Derycz Scientific, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders' Deficiency

For the Six Months Ended December 31, 2012

(Unaudited)

	Common Stock				Additional Paid-in			Accumulated			Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital			Deficit			Income			Deficiency
Balance, July 1, 2012		17,069,437	$	17,069	$	13,671,873		$	(14,184,160	)	$	60,654		$	(434,564	)
Fair value of options issued to employees		-		-		110,406			-			-			110,406
Common shares issued upon exercise of stock options		17,844		18		(18	)		-			-			-
Common shares issued for customer list		182,244		182		154,726			-			-			154,908
Net income for the period		-		-		-			124,286			-			124,286
Foreign currency translation		-		-		-			-			(65,250	)		(65,250	)
Balance, December 31, 2012		17,269,525	$	17,269	$	13,936,987		$	(14,059,874	)	$	(4,596	)	$	(110,214	)

See notes to condensed consolidated financial statements

5

Derycz Scientific, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months ended
	December 31,
	2012			2011
Cash flow from operating activities:
Net income (loss)	$	124,286		$	(3,468,961	)
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		343,815			1,004,565
Fair value of vested stock options		110,406			84,438
Fair value of warrants issued for services, net of adjustment		-			(237,126	)
Fair value of warrant extensions		-			264,714
Gain on sale of fixed assets		(6,879	)		-
Changes in operating assets and liabilities:
Accounts receivable		(2,773,262	)		(785,273	)
Inventory		11,718			167,985
Due from factor		(63,604	)		272,186
Prepaid expenses		(590,644	)		61,394
Prepaid royalties		13,779			786,449
Deposits and other assets		(2,913	)		60,706
Accounts payable and accrued expenses		3,677,225			3,492,110
Deferred revenue and other current liabilities		257,474			94,000
Net cash provided by operating activities		1,101,401			1,797,187
Cash flow from investing activities:
Purchase of property and equipment		(61,810	)		(44,607	)
Purchase of intangible assets		-			(161,140	)
Proceeds from sale of fixed asset		16,357			-
Net cash used in investing activities		(45,453	)		(205,747	)
Cash flow from financing activities:
Payments to factor		(8,860	)		-
Payment of notes payable		(28,263	)		(42,249	)
Payment of capital lease obligation		(262,845	)		(484,835	)
Payment of related parties		-			(67,383	)
Repayments under line of credit		(900,000	)		(661,769	)
Net cash used in financing activities		(1,199,968	)		(1,256,236	)
Effect of exchange rate changes		(108,673	)		138,197
Net increase (decrease) in cash and cash equivalents		(252,693	)		473,401
Cash and cash equivalents, beginning of period		3,150,978			2,868,260
Cash and cash equivalents, end of period	$	2,898,285		$	3,341,661

(continued)

6

Derycz Scientific, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (continued)

(Unaudited)

	Six Months ended
	December 31,
	2012		2011
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	1,681	$	19,629
Cash paid for interest	$	59,560	$	123,014
Supplemental disclosures of non-cash investing and financing activities:
Acquisition of customer list through issuance of common shares	$	154,908	$	-

See notes to condensed consolidated financial statements

7

DERYCZ SCIENTIFIC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and Six Months Ended December 31, 2012 and 2011 (Unaudited)

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

Organization

Derycz Scientific, Inc. (the “Company”) 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”); Reprints Desk Latin America S. de R.L. de C.V, an entity organized under the laws of Mexico; and Techniques Appliquées aux Arts Graphiques, S.p.A. (“TAAG”), an entity organized under the laws of France.

Nature of Business

Our mission is to provide information logistics solutions that facilitate the flow of information from the publishers of scientific and technical content to enterprise customers in life science and other research intensive industries around the world. We provide customers with access to hundreds of thousands of newly published articles each year in addition to the tens of millions of existing articles that have been published in the past, helping them to identify the most useful and relevant content for their purposes. We serve both the publishers who own the content rights and the end-users of the content. We utilize web-based platforms as well as traditional delivery channels and are developing products and services that make it easier for our customers to find and legally use information. During the year ended June 30, 2012, we delivered more than 10 million articles in either hard copy or electronic form to over 1,000 customers in over 100 countries.

We provide three types of solutions to our customers; research solutions; marketing solutions; and publisher solutions. 

Research Solutions

Researchers and regulatory personnel generally order single copies of published materials, called “document delivery,” for use in their research activities. In order to use the content, our customers must pay appropriate copyright fees and our services ensure that we have obtained the necessary permissions from the owners of the published content so that our customers’ use of the content complies with applicable copyright laws. We have developed Internet-based interfaces that allow customers to initiate orders and manage transactions, at any time, by specifying the citation or other identifying information related to the particular article they need. In some cases, we are able to fulfill the order without the need for action on the part of our employees. We also help these customers to maximize the information resources they already own or have access to via subscriptions or internal libraries, as well as organize workgroups to collaborate around scientific information. Our services alleviate the need for our customers to develop internal systems or contact multiple publishers in order to obtain the required information.

Marketing Solutions

Generally, marketing departments order large quantities of printed copies of published materials called “reprints” that they distribute to interested parties, including customers and doctors who may prescribe a customer’s products. We print the reprints we deliver to our customers whenever possible and are responsible for any logistics required to distribute such reprints. TAAG also prints other materials that are used for marketing purposes and provides other printing logistics products and services.  Electronic copies, called “eprints,” are also used for distribution through the Internet and other electronic mechanisms. We have also developed eprint software systems that increase the efficiency of our customers’ content purchases by transitioning from paper reprints to electronic eprints. Our software systems also help to improve compliance with copyright and promotional regulations within the life sciences industry.

Publisher Solutions

Our publisher solutions include technology solutions and reprint management services, whereby we are responsible for all aspects of reprint and eprint production for a publisher, from taking orders to final delivery. This service eliminates the need for the publishers to establish a dedicated reprints sales force or arrange for delivery of reprinted materials. Our eprint software systems enable publishers to protect their copyrighted content and support the marketing needs of their customers.

Liquidity

Historically, we have relied upon cash from financing activities to fund substantially all of the cash requirements of our activities and have incurred significant losses and experienced negative cash flow. As of December 31, 2012, the Company had negative working capital of $1,028,504 and shareholders’ deficiency of $110,214. However, for the six months ended December 31, 2012, the Company recorded a net income of $124,286 and cash provided by operating activities was $1,101,401 during this period. We may be unable to sustain or increase our profitability on a quarterly or annual basis and we may incur losses in future periods. An extended period of losses and negative cash flow may prevent us from successfully operating and expanding our business.

8

US Operations (Reprints)

The Company believes that its current cash resources and cash flow from US operations will be sufficient to sustain current US operations for the next twelve months. The Company expects to continue to produce cash from US operating activities; however, there are no assurances that such results will be achieved.

TAAG (France)

The Company believes that its current cash resources and cash flow from TAAG may not be sufficient to sustain TAAG operations for the next twelve months. During the six months ended December 31, 2012, TAAG incurred a loss from operations of $270,253, and at December 31, 2012, had a working capital deficiency of $1,941,035. In addition, approximately $700,000 of payroll and VAT taxes were delinquent at December 31, 2012. The Company’s line of credit with Silicon Valley Bank limits the amount of funding of TAAG to $50,000 and no additional financing for TAAG is in place. Revenue from TAAG seems to have stabilized in early 2012, however, continuing net losses have been incurred.  Our overall strategy is to improve TAAG’s revenue, operations, and profitability.  As a result, we have performed, and continue to perform, financial and operational analysis on TAAG.  We have replaced all executive and accounting management at TAAG and hired a new executive manager and engaged a professional accounting services firm to ensure these improvements are implemented, however, there is no assurance that such results will be achieved.  In the event that TAAG liquidates our exposure to creditors in France is limited to the assets of TAAG, with the exception of the property lease which is ultimately guaranteed by Derycz Scientific, Inc. In the event that TAAG liquidates we could lose a significant percentage of revenue, or all revenue, from TAAG. 

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 filed with the SEC. The condensed consolidated balance sheet as of June 30, 2012 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

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.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

These estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, analysis of impairments of recorded goodwill and intangibles, accruals for potential liabilities and assumptions made in valuing equity instruments issued for services or acquisitions.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. The Company extends credit based on an evaluation of the customer's financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required.

9

Cash denominated in Euros with a US Dollar equivalent of $462,194 and $763,462 at December 31, 2012 and June 30, 2012, respectively, was held in accounts at financial institutions located in Europe.

The following table summarizes accounts receivable concentrations:

	As of December 31, 2012			As of June 30, 2012
Customer A		34	%		18	%

The following table summarizes revenue concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Customer A		23	%		21	%		16	%		13	%

The following table summarizes content cost concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Vendor A		30	%			*		22	%			*
Vendor B		26	%		18	%		22	%		16	%
Vendor C			*		13	%			*		16	%

* Less than 10%

Revenue Recognition

The Company’s policy is to recognize revenue when services have been performed, risk of loss and title to the product transfers to the customer, the selling price is fixed or determinable, and collectability is reasonably assured. We generate revenue by providing three types of services to our customers; document delivery; reprints and eprints; and printing and reprint management.

Document Delivery

Our business model for document delivery services is based on charging our customers a copyright fee necessary to obtain permission of use from the content owner (publisher), and a service fee for delivering the content. We have existing non-exclusive arrangements with many publishers that provide us with electronic access to much of these publishers’ content, which allows us to deliver single copies of such content to our customers in a more efficient and timely manner, often in a matter of minutes. The Company recognizes revenue from document delivery services upon electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Reprints and eprints

Our business model for reprints and eprints is based on charging a fee for aggregating and distributing multiple copies of published materials. When possible, we obtain the right to print the reprints from the holder of the copyright and we print and ship the reprints ourselves. We also have built systems that can provide controlled distribution of electronic copies or eprints. The Company recognizes revenue from reprints and eprints services upon shipment or electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Printing and Reprint Management

Our business model for printing is based on charging a fee for providing printing services and delivering hard copy materials to our customers that are generally used for marketing purposes. In addition, we also provide other printing logistics products and services. These services are complementary to our reprints and eprints, and reprint management services. The Company recognizes revenue from printing services when the printed materials have been shipped to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

10

Stock-based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations.  The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with Topic 718 of the FASB Accounting Standards Codification, whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.  Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

Foreign Currency Translation

The accompanying condensed consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the revenues and costs of TAAG are in Euros. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.

Net Income (Loss) Per Share

Current accounting guidance requires presentation of basic earnings per share and diluted earnings per share.   Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented with a net loss because all warrants and stock options outstanding are anti-dilutive.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share as they would be anti-dilutive because the Company had net losses for the period below:

	As of December 31,
Potentially Dilutive Securities	2011
Warrants		2,576,182
Stock options		1,464,000
		4,040,182

Recently Issued Accounting Pronouncements

In December 2011, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013.  The Company does not expect adoption of this standard to have a material impact on its consolidated financial statement disclosures.

In July 2012, the FASB issued ASU No. 2012-02,  Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment  (ASU 2012-02) ,  allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for the Company in the period beginning January 1, 2013. The Company does not expect the adoption of this update to have a material effect on the consolidated financial statements. 

11

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Note 3 — Line of Credit

The Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which as amended, provides for a $4,000,000 revolving line of credit that matures on October 31, 2013.  On February 8, 2012, the Company entered into an Amendment to the Loan and Security Agreement pursuant to which SVB waived our failure to comply with the minimum tangible net worth financial covenant set forth in the Loan Agreement for the compliance period ended December 31, 2011, the parties agreed to amend the minimum tangible net worth required for various periods in calendar year 2012, and the parties agreed that the principal amount outstanding under the revolving line shall accrue interest at the prime rate plus 2.5% for periods in which the Company maintains an account balance with SVB (less all indebtedness owed to SVB) of at least $800,000 at all times during the prior calendar month (the “Streamline Period”), and at the prime rate plus 4.5% when a Streamline Period is not in effect. The interest rate on the line of credit was 6.5% as of December 31, 2012.  The line of credit is secured by all of the Company’s and its subsidiaries’ assets, excluding TAAG’s assets.  

The line of credit is subject to certain financial and performance covenants which the Company was in compliance with as of December 31, 2012.  The balance outstanding as of December 31, 2012, and June 30, 2012 was $100,000 and $1,000,000, respectively.  As of December 31, 2012 and June 30, 2012, approximately $3,700,000 and $1,875,000, respectively, of available credit was unused under the line of credit.

Note 4 – Factor Agreements

The Company, through TAAG, has factoring agreements with ABN Amro (“ABN”) and Credit Cooperatif for working capital and credit administration purposes.  Under the agreements, the factors purchase trade accounts receivable assigned to them by the Company.  The accounts are sold (with recourse) at the invoice amount subject to a factor commission and other miscellaneous fees.  Trade accounts receivable not sold remain in the Company's custody and control and the Company maintains all credit risk on those accounts.

Under the agreement with ABN, the Company can borrow up to approximately $1.3 million (Euro 1,000,000), limited to 40% of its trade accounts.  The factor fee is 0.26% of the customer invoice including VAT and interest is charged on the amount financed at the one month Euribor interest rate plus 1.2%. The interest rate under the agreement was 1.69% per annum at December 31, 2012. As of December 31, 2012 and June 30, 2012, $260,643 and $197,039 was due from ABN, respectively.

Under the agreement with Credit Cooperatif, the Company can borrow up to approximately $325,000 (Euro 250,000).  The factor fee is determined on a case by case basis and is not specified in the agreement. The fee charged for the obligations outstanding as of December 31, 2012 was approximately 5%. As of December 31, 2012 and June 30, 2012, $247,776 and $256,636 was due to Credit Cooperatif, respectively, that relate to funds paid to the Company not yet returned to the factor.

Note 5 — Stockholders’ Equity

Stock Options

On December 21, 2007, the Company established the 2007 Equity Compensation Plan (the “Plan”) as approved by our Board of Directors and stockholders. On November 15, 2012, the maximum number of shares of common stock that may be issued pursuant to awards granted under the Plan increased from 1,500,000 to 3,000,000, as approved by our Board of Directors and stockholders. The majority of awards issued under the Plan vest immediately or over three years, and have a term of ten years. There were 1,555,769 shares available for grant under the Plan as of December 31, 2012. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and recognized over the requisite service period, which is generally the vesting period.

The following table summarizes vested and unvested options activity:

	All Options					Vested Options					Unvested Options
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at June 30, 2012		1,471,167		$	1.27		1,141,666		$	1.27		329,500		$	1.29
Granted		53,898			1.07		35,565			1.07		18,333			1.07
Options vesting		-			-		96,667			1.25		(96,667	)		1.25
Exercised		(73,333	)		1.01		(73,333	)		1.01		-			-
Forfeited/Cancelled		(80,834	)		1.82		(80,834	)		1.82		-			-
Outstanding at December 31, 2012		1,370,898		$	1.25		1,119,731		$	1.24		251,166		$	1.30

12

 The weighted average remaining contractual life of all options outstanding as of December 31, 2012 was 6.97 years. The weighted average remaining contractual life for options vested and exercisable at December 31, 2012 was 6.55 years. Furthermore, there was no intrinsic value for all options outstanding as of December 31, 2012, or for options vested and exercisable at December 31, 2012, in each case based on the fair value of the Company’s common stock on December 31, 2012. The total fair value of options vested during the six months ended December 31, 2012 was $110,406 and is included in selling, general and administrative expenses in the accompanying statement of operations.  As of December 31, 2012, the amount of unvested compensation related to these options was $239,529 which will be recorded as an expense in future periods as the options vest.

On July 20, 2012, a former employee exercised options to purchase 73,333 shares of the Company’s common stock on a cashless basis.  The Company issued 17,844 shares of common stock as a result of the exercise.

Additional information regarding stock options outstanding and exercisable as of December 31, 2012 is as follows:

Option Exercise Price	Options Outstanding		Remaining Contractual Life (in years)		Options Exercisable
$1.00		352,000		6.41		352,000
1.02		289,000		7.58		240,833
1.07		53,898		9.79		35,565
1.30		263,000		9.18		87,667
1.50		385,000		5.06		385,000
3.00		15,000		8.04		10,000
3.05		10,000		8.12		6,666
3.65		3,000		8.22		2,000
Total		1,370,898				1,119,731

Warrants

The following table summarizes warrant activity:

				Weighted
				Average
	Number of			Exercise
	Warrants			Price
Outstanding, June 30, 2012		2,576,182		$	2.06
Granted		-			-
Exercised		-			-
Expired		(200,009	)		2.00
Outstanding, December 31, 2012		2,376,173		$	2.06
Exercisable, June 30, 2012		2,576,182		$	2.06
Exercisable, December 31, 2012		2,376,173		$	2.06

There was no intrinsic value for all warrants outstanding as of December 31, 2012, based on the fair value of the Company’s common stock on December 31, 2012.

Additional information regarding warrants outstanding and exercisable as of December 31, 2012 is as follows:

Warrant Exercise Price	Warrants Outstanding		Remaining Contractual Life (in years)		Warrants Exercisable
$1.19		150,000		8.98		150,000
1.25		150,000		1.85		150,000
1.75		333,331		1.89		333,331
2.00		1,081,175		0.83		1,081,175
2.25		266,667		1.97		266,667
3.00		390,000		1.12		390,000
3.50		2,500		3.50		2,500
4.00		2,500		3.50		2,500
Total		2,376,173				2,376,173

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Shares Issued for Customer List

On November 1, 2012, the Company purchased a customer list for 182,244 shares of common stock valued at approximately $200,000, and an earnout of up to 6.5% of revenue derived from the customer list over a two year period.  The customer list will be amortized over an estimated useful life of 2 years.

Note 6 — Geographical Information

As of December 31, 2012, the Company had two reportable diverse geographical concentrations:  US Operations and TAAG, which operates in France.  Information related to these operating segments, net of eliminations, consists of the following for the periods below:

	Three Months Ended December 31, 2012					Six Months Ended December 31, 2012
	US Operations		TAAG (France)			US Operations		TAAG (France)
Revenue	$	11,544,064	$	2,438,034		$	18,647,223	$	4,876,874
Cost of revenue		9,848,155		1,375,242			15,685,344		2,923,208
Selling, general and administrative expenses		1,242,750		1,171,951			2,365,597		2,039,814
Depreciation and amortization		43,191		91,723			137,467		184,105
Income (loss) from operations	$	409,968	$	(200,882	)	$	458,815	$	(270,253	)

	As of December 31, 2012				As of June 30, 2012
	US Operations		TAAG (France)		US Operations		TAAG (France)
Current assets	$	10,747,171	$	2,789,790	$	7,765,813	$	2,635,878
Property and equipment, net		268,081		855,719		300,831		993,686
Intangible assets, net and goodwill		143,075		-		65,510		-
Other non-current assets		16,753		244,412		27,155		217,047
Total assets	$	11,175,080	$	3,889,921	$	8,159,309	$	3,846,611
Current liabilities	$	9,834,640	$	4,730,825	$	7,468,482	$	4,105,377
Long term liabilities		-		609,750		-		866,625
Total liabilities	$	9,834,640	$	5,340,575	$	7,468,482	$	4,972,002

Note 7 — Subsequent Events

In February 2013, the Company filed a lawsuit against the two former owners and managers of TAAG within the Commercial Court of Evry, France.  The suit alleges mismanagement by the two former owners and managers of TAAG prior to and after the Company’s acquisition of TAAG, and seeks damages of approximately $600,000.  The outcome of this pending litigation is uncertain. 

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Notice Regarding Forward-Looking Statements

In this document, Derycz Scientific, Inc. and its subsidiaries are referred to as “we,” “our,” “us,” or the “Company”.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our June 30, 2012 Annual Report on Form 10-K.

 Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, without limitation:

· the projected growth or contractions in the industry within which we operate;

· our business strategy for expanding, maintaining or contracting our presence in these markets;

· anticipated trends in our financial condition and results of operations; and

· our ability to distinguish ourselves from our current and future competitors.

We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.

Overview

Derycz Scientific, Inc. was incorporated in the State of Nevada on November 2, 2006. In November 2006 the Company entered into a Share Exchange Agreement with Reprints Desk, Inc., a Delaware corporation. At the closing of the transaction contemplated by the Share Exchange Agreement, the Company acquired all of the outstanding shares of Reprints from the shareholders of Reprints and issued 8,000,003 common shares to the former shareholders of Reprints. Following completion of the exchange transaction, Reprints became a wholly-owned subsidiary of the Company.

On February 28, 2007, the Company entered into an agreement with Pools Press, Inc., an Illinois corporation, pursuant to which the Company acquired 75% of the issued and outstanding common stock of Pools for consideration of $616,080. The Company purchased the remaining interest in Pools that it did not already own on August 31, 2010. Pools is a commercial printer, specializing in reprints of copyrighted articles. The results of Pools Press’ operations have been included in the Company’s consolidated financial statements since March 1, 2007. On January 1, 2012, Pools merged with and into Reprints whereby Reprints assumed all of the rights and properties of Pools, forming one consolidated subsidiary and eliminating the separate legal existence of Pools.

On March 31, 2011, the Company entered into an agreement with Fimmotaag, S.p.A., a privately held company domiciled in France, pursuant to which the Company acquired 100% of the issued and outstanding common stock of Techniques Appliquées aux Arts Graphiques, S.p.A., in exchange for 336,921 shares of the Company’s common stock in addition to future payments payable at the option of Fimmotaag in cash or the Company’s common stock under the terms of the purchase agreement. TAAG is a printing and logistics company located outside of Paris, France.

 On July 24, 2012 the Company formed Reprints Desk Latin America S. de R.L. de C.V, an entity organized under the laws of Mexico.

Our mission is to provide information logistics solutions that facilitate the flow of information from the publishers of scientific and technical content to enterprise customers in life science and other research intensive industries around the world. We make the hundreds of thousands of new articles each year, in addition to the tens of millions of existing articles that have been published in the past, available to our customers and help them identify the most useful and relevant content for their purposes. We serve both the publishers who own the content rights and the end-users of the content. We utilize web-based platforms as well as traditional delivery channels and are developing products and services that make it easier for our customers to find and use information. During the year ended June 30, 2012, we delivered more than 10 million articles in either hard copy or electronic form to over 1,000 customers in over 100 countries.

We provide three types of solutions to our customers; research solutions; marketing solutions; and publisher solutions. 

15

Research Solutions

Researchers and regulatory personnel generally order single copies of published materials, called “document delivery,” for use in their research activities. In order to use the content, our customers must pay appropriate copyright fees and our services ensure that we have obtained the necessary permissions from the owners of the published content so that our customers’ use of the content complies with applicable copyright laws. We have developed Internet-based interfaces that allow customers to initiate orders and manage transactions, at any time, by specifying the citation or other identifying information related to the particular article they need. In some cases, we are able to fulfill the order without the need for action on the part of our employees. We also help these customers to maximize the information resources they already own or have access to via subscriptions or internal libraries, as well as organize workgroups to collaborate around scientific information. Our services alleviate the need for our customers to develop internal systems or contact multiple publishers in order to obtain the required information.

Marketing Solutions

Generally, marketing departments order large quantities of printed copies of published materials called “reprints” that they distribute to interested parties, including customers and doctors who may prescribe a customer’s products. We print the reprints we deliver to our customers whenever possible and are responsible for any logistics required to distribute such reprints. TAAG also prints other materials that are used for marketing purposes and provides other printing logistics products and services.  Electronic copies, called “eprints,” are also used for distribution through the Internet and other electronic mechanisms. We have also developed eprint software systems that increase the efficiency of our customers’ content purchases by transitioning from paper reprints to electronic eprints. Our software systems also help to improve compliance with copyright and promotional regulations within the life sciences industry.

Publisher Solutions

Our publisher solutions include technology solutions and reprint management services, whereby we are responsible for all aspects of reprint and eprint production for a publisher, from taking orders to final delivery. This service eliminates the need for the publishers to establish a dedicated reprints sales force or arrange for delivery of reprinted materials. Our eprint software systems enable publishers to protect their copyrighted content and support the marketing needs of their customers.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties.

Revenue Recognition

The Company’s policy is to recognize revenue when services have been performed, risk of loss and title to the product transfers to the customer, the selling price is fixed or determinable, and collectability is reasonably assured. We generate revenue by providing three types of services to our customers; document delivery; reprints and eprints; and printing and reprint management.

Document Delivery

Our business model for document delivery services is based on charging our customers a copyright fee necessary to obtain permission of use from the content owner (publisher), and a service fee for delivering the content. We have existing non-exclusive arrangements with many publishers that provide us with electronic access to much of these publishers’ content, which allows us to deliver single copies of such content to our customers in a more efficient and timely manner, often in a matter of minutes. The Company recognizes revenue from document delivery services upon electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Reprints and eprints

Our business model for reprints and eprints is based on charging a fee for aggregating and distributing multiple copies of published materials. When possible, we obtain the right to print the reprints from the holder of the copyright and we print and ship the reprints ourselves. We also have built systems that can provide controlled distribution of electronic copies or eprints. The Company recognizes revenue from reprints and eprints services upon shipment or electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

16

Printing and Reprint Management

Our business model for printing is based on charging a fee for providing printing services and delivering hard copy materials to our customers that are generally used for marketing purposes. In addition, we also provide other printing logistics products and services. These services are complementary to our reprints and eprints, and reprint management services. The Company recognizes revenue from printing services when the printed materials have been shipped to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Stock-Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of the Financial Accounting Standards Board (the "FASB") Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations.  The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with Topic 718 of the FASB Accounting Standards Codification, whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.  Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

Results of Operations

Comparison of the Three Months and Six Months Ended December 31, 2012 and 2011

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2012			2011			2012			2011
Revenue	$	13,982,098		$	12,089,519		$	23,524,097		$	21,950,738
Cost of revenue		11,223,397			10,310,259			18,608,552			18,699,001
Gross profit		2,758,701			1,779,260			4,915,545			3,251,737
Operating expenses:
Selling, general and administrative		2,346,467			2,794,259			4,295,005			5,518,804
Stock-based compensation expense		68,234			209,127			110,406			112,027
Depreciation and amortization		134,914			480,094			321,572			966,095
Total operating expenses		2,549,615			3,483,480			4,726,983			6,596,926
Income (loss) from operations		209,086			(1,704,220	)		188,562			(3,345,189	)
Gain on sale of fixed assets		-			-			6,879			-
Interest expense		(22,723	)		(71,319	)		(59,560	)		(123,013	)
Other income (expense)		(6,956	)		17,773			(9,914	)		18,870
Income (loss) before provision for income taxes		179,407			(1,757,766	)		125,967			(3,449,332	)
Provision for income taxes		(1,088	)		(19,629	)		(1,681	)		(19,629	)
Net income (loss)		178,319			(1,777,395	)		124,286			(3,468,961	)
Other comprehensive income (loss):
Foreign currency translation		(37,603	)		14,337			(65,250	)		33,940
Comprehensive income (loss)	$	140,716		$	(1,763,058	)	$	59,036		$	(3,435,021	)
Net income (loss) per share:
Basic	$	0.01		$	(0.10	)	$	0.01		$	(0.20	)
Diluted	$	0.01		$	(0.10	)	$	0.01		$	(0.20	)
Weighted average shares outstanding:
Basic		17,208,117			17,069,437			17,145,856			17,022,467
Diluted		17,208,117			17,069,437			17,175,663			17,022,467

17

Revenue

	Three Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Revenue:
US operations	$	11,544,064	$	8,956,996	$	2,587,068			28.9	%
TAAG (France)		2,438,034		3,132,523		(694,489	)		(22.2	)%
Total revenue	$	13,982,098	$	12,089,519	$	1,892,579			15.7	%

	Six Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Revenue:
US operations	$	18,647,223	$	15,763,881	$	2,883,342			18.3	%
TAAG (France)		4,876,874		6,186,857		(1,309,983	)		(21.2	)%
Total revenue	$	23,524,097	$	21,950,738	$	1,573,359			7.2	%

Revenue from US operations increased $2,587,068 or 28.9%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and $2,883,342, or 18.3%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the increase was primarily due to increased orders from current customers and the acquisition of new customers. We expect revenue from US operations to continue to increase during the 2013 fiscal year.

Revenue from TAAG decreased $694,489 or 22.2%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and $1,309,983, or 21.2%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the decrease was primarily due to disappointing sales efforts and general financial uncertainty in Europe.  The Company has replaced the local management of TAAG as part of our overall strategy for improving revenue, operations, and profitability; however, there is no assurance that such results will be achieved, or that revenue will continue to decrease.

Cost of Revenue

	Three Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Cost of Revenue:
US operations	$	9,848,155	$	8,610,137	$	1,238,018			14.4	%
TAAG (France)		1,375,242		1,700,122		(324,880	)		(19.1	)%
Total cost of revenue	$	11,223,397	$	10,310,259	$	913,138			8.9	%

As a percentage of revenue:
US operations	85.3	%	96.1	%	(10.8	)%
TAAG (France)	56.4	%	54.3	%	2.1	%
Total	80.3	%	85.3	%	(5.0	)%

	Six Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Cost of Revenue:
US operations	$	15,685,344	$	15,030,546	$	654,798			4.4	%
TAAG (France)		2,923,208		3,668,455		(745,247	)		(20.3	)%
Total cost of revenue	$	18,608,552	$	18,699,001	$	(90,449	)		(0.5	)%

18

As a percentage of revenue:
US operations	84.1	%	95.3	%	(11.2	)%
TAAG (France)	59.9	%	59.3	%	0.6	%
Total	79.1	%	85.2	%	(6.1	)%

Cost of revenue as a percentage of revenue from US operations decreased 10.8%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and 11.2%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the decrease was primarily due to reductions in production expenses and decreased payments to publishers.

Cost of revenue as a percentage of revenue from TAAG increased 2.1%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and 0.6%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the variance was primarily due to production expenses.

Gross Profit

	Three Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Gross Profit:
US operations	$	1,695,909	$	346,859	$	1,349,050			388.9	%
TAAG (France)		1,062,792		1,432,401		(369,609	)		(25.8	)%
Total gross profit	$	2,758,701	$	1,779,260	$	979,441			55.0	%

As a percentage of revenue:
US operations	14.7	%	3.9	%	10.8	%
TAAG (France)	43.6	%	45.7	%	(2.1	)%
Total	19.7	%	14.7	%	5.0	%

	Six Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Gross Profit:
US operations	$	2,961,879	$	733,335	$	2,228,544			303.9	%
TAAG (France)		1,953,666		2,518,402		(564,736	)		(22.4	)%
Total gross profit	$	4,915,545	$	3,251,737	$	1,663,808			51.2	%

As a percentage of revenue:
US operations	15.9	%	4.7	%	11.2	%
TAAG (France)	40.1	%	40.7	%	(0.6	)%
Total	20.9	%	14.8	%	6.1	%

Operating Expenses

	Three Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Operating Expenses:
US Operations:
Selling, general and administrative	$	1,174,516	$	1,630,907	$	(456,391	)		(28.0	)%
Depreciation and amortization		43,191		88,550		(45,359	)		(51.2	)%
Stock-based compensation expense		68,234		209,127		(140,893	)		(67.4	)%
Total US operations		1,285,941		1,928,584		(642,643	)		(33.3	)%
TAAG (France):
Selling, general and administrative		1,171,951		1,163,352		8,599			0.7	%
Depreciation and amortization		91,723		391,544		(299,821	)		(76.6	)%
Total TAAG (France) operations		1,263,674		1,554,896		(291,222	)		(18.7	)%
Total operating expenses	$	2,549,615	$	3,483,480	$	(933,865	)		(26.8	)%

19

	Six Months Ended December 31,
	2012		2011		2012-2011 $ Change			2012-2011 % Change
Operating Expenses:
US Operations:
Selling, general and administrative	$	2,255,191	$	3,222,171	$	(966,980	)		(30.0	)%
Depreciation and amortization		137,467		168,445		(30,978	)		(18.4	)%
Stock-based compensation expense		110,406		112,027		(1,621	)		(1.4	)%
Total US operations		2,503,064		3,502,643		(999,579	)		(28.5	)%
TAAG (France):
Selling, general and administrative		2,039,814		2,296,633		(256,819	)		(11.2	)%
Depreciation and amortization		184,105		797,650		(613,545	)		(76.9	)%
Total TAAG (France) operations		2,223,919		3,094,283		(870,364	)		(28.1	)%
Total operating expenses	$	4,726,983	$	6,596,926	$	(1,869,943	)		(28.3	)%

Selling, General and Administrative

Selling, general and administrative expenses from US operations decreased $456,391 or 28%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and $966,980 or 30%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the decrease was primarily due to reductions in compensation and professional service fees.

Selling, general and administrative expenses from TAAG decreased $256,819 or 11.2%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011 primarily due to reductions in compensation.

Depreciation and Amortization

Depreciation and amortization for the three and six months ended December 31, 2012, amounted to $144,212 and $343,815, respectively, with $9,298 and $22,242 recorded under cost of revenue in the same respective periods.

The amounts recorded for US operations are split between depreciation and amortization of customer lists. We expect depreciation and amortization expense for US operations to remain at current levels during the 2013 fiscal year.

The amounts recorded for TAAG consist mostly of depreciation on printing equipment. We expect depreciation expense for TAAG to remain at current levels during the 2013 fiscal year.

Interest Expense

Interest expense was $59,560 for the six months ended December 31, 2012, compared to $123,013 for the six months ended December 31, 2011, a decrease of $63,453. The decrease was primarily attributable to the decreased borrowing on the credit line for US operations with Silicon Valley Bank which provides a $4 million revolving line of credit secured by all of the assets of the Company, excluding TAAG’s assets. The majority of interest expense is from capital leases of printing equipment at TAAG. We expect interest expense to remain at current levels during the 2013 fiscal year.

Net Income (Loss)

	Three Months Ended December 31,
	2012			2011			2012-2011 $ Change			2012-2011 % Change
Net Income (Loss):
US Operations	$	396,909		$	(1,613,970	)	$	2,010,879			124.6	%
TAAG (France)		(218,590	)		(163,425	)		(55,165	)		(33.8	)%
Total net loss	$	178,319		$	(1,777,395	)	$	1,955,714			110.0	%

20

	Six Months Ended December 31,
	2012			2011			2012-2011 $ Change		2012-2011 % Change
Net Income (Loss):
US Operations	$	439,852		$	(2,823,974	)	$	3,263,826		115.6	%
TAAG (France)		(315,566	)		(644,987	)		329,421		51.1	%
Total net loss	$	124,286		$	(3,468,961	)	$	3,593,247		103.6	%

Net income from US operations increased $2,010,879 or 124.6%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, and $3,263,826 or 115.6%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. In both periods, the increase was primarily due to increased gross profit and decreased selling, general and administrative expenses as described above.

The net loss from TAAG increased $55,165 or 33.8%, for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, primarily due to decreased gross profit as described above. The net loss from TAAG decreased $329,421 or 51.1%, for the six months ended December 31, 2012 compared to the six months ended December 31, 2011, primarily due to decreased operating expenses as described above.

Liquidity and Capital Resources

	Six Months Ended December 31,
Consolidated Statements of Cash Flow Data:	2012			2011
Net cash provided by (used) in operating activities	$	1,101,401		$	1,797,187
Net cash provided by (used) in investing activities	$	(45,453	)	$	(205,747	)
Net cash provided by (used) in financing activities	$	(1,199,968	)	$	(1,256,236	)

Since our inception, we have funded our operations primarily through private sales of equity securities and the exercise of warrants, which have provided aggregate net cash proceeds to date of approximately $10,350,000, of which $5,250,000 was raised in the fiscal year ended June 30, 2011.

As of December 31, 2012, we had cash and cash equivalents of $2,898,285 compared to $3,150,978 as of June 30, 2012, a decrease of $252,693. This decrease is primarily attributable to an increase in accounts receivable of $2,773,262, an increase in prepaid expenses of $590,644, and repayments under our credit line of $900,000, partially offset by an increase in accounts payable of $3,677,225.

We believe that our current cash resources and future cash flows will be sufficient to sustain current operations for the next twelve months.

US Operations (Reprints)

The Company believes that its current cash resources and cash flow from US operations will be sufficient to sustain current US operations for the next twelve months. The Company expects to continue to produce cash from US operating activities; however, there are no assurances that such results will be achieved.

TAAG (France)

The Company believes that its current cash resources and cash flow from TAAG may not be sufficient to sustain TAAG operations for the next twelve months. During the six months ended December 31, 2012, TAAG incurred a loss from operations of $270,253, and at December 31, 2012, had a working capital deficiency of $1,941,035. In addition, approximately $700,000 of payroll and VAT taxes were delinquent at December 31, 2012. The Company’s line of credit with Silicon Valley Bank limits the amount of funding of TAAG to $50,000 and no additional financing for TAAG is in place. Revenue from TAAG seems to have stabilized in early 2012, however, continuing net losses have been incurred.  Our overall strategy is to improve TAAG’s revenue, operations, and profitability.  As a result, we have performed, and continue to perform, financial and operational analysis on TAAG.  We have replaced all executive and accounting management at TAAG and hired a new executive manager and engaged a professional accounting services firm to ensure these improvements are implemented, however, there is no assurance that such results will be achieved.  In the event that TAAG liquidates our exposure to creditors in France is limited to the assets of TAAG, with the exception of the property lease which is ultimately guaranteed by Derycz Scientific, Inc. In the event that TAAG liquidates we could lose a significant percentage of revenue, or all revenue, from TAAG. 

Operating Activities

Our net cash provided by operating activities was $1,101,401 for the six months ended December 31, 2012 and resulted primarily from an increase in accounts payable of $3,677,225 and non-cash depreciation and amortization of $343,815, partially offset by an increase in accounts receivable of $2,773,262 and an increase in prepaid expenses of $590,644.

21

Our net cash provided by operating activities was $1,797,187 for the six months ended December 31, 2011 and resulted primarily from an increase in accounts payable of $3,492,110, non-cash depreciation and amortization of $1,004,565, and a decrease of prepaid royalties of $786,449, partially offset by an increase in accounts receivable of $785,273 as well as the net loss of $3,468,961 for the period.

Investing Activities

Our net cash used in investing activities was $45,453 for the six months ended December 31, 2012 and resulted primarily from the purchase of property and equipment.

Our net cash used in investing activities was $205,747 for the six months ended December 31, 2011 and resulted primarily from the purchase of intangible assets and property and equipment.

Financing Activities

Our net cash used in financing activities was $1,199,968 for the six months ended December 31, 2012 and resulted primarily from repayments under our credit line of $900,000 and payments of capital lease obligations of $262,845.

Our net cash used in financing activities was $1,256,236 for the six months ended December 31, 2011 and resulted primarily from repayments under our credit line of $661,769 and payments of capital lease obligations of $484,835.

The Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which as amended, provides for a $4,000,000 revolving line of credit that matures on October 31, 2013.  The SVB line of credit bears interest at the prime rate plus 2.5% for periods in which the Company maintains an account balance with SVB (less all indebtedness owed to SVB) of at least $800,000 at all times during the prior calendar month (the “Streamline Period”), and at the prime rate plus 4.5% when a Streamline Period is not in effect.  The interest rate on the line of credit was 6.5% as of December 31, 2012.  The line of credit is secured by all of the Company’s and its subsidiaries’ assets, excluding TAAG’s assets.    

The line of credit is subject to certain financial and performance covenants which the Company was in compliance with as of December 31, 2012.  The balance outstanding as of December 31, 2012, and June 30, 2012 was $100,000 and $1,000,000, respectively.  As of December 31, 2012 and June 30, 2012, approximately $3,700,000 and $1,875,000, respectively, of available credit was unused under the line of credit.

The Company, through TAAG, has factoring agreements with ABN Amro (“ABN”) and Credit Cooperatif for working capital and credit administration purposes.  Under the agreements, the factors purchase trade accounts receivable assigned to them by the Company.  The accounts are sold (with recourse) at the invoice amount subject to a factor commission and other miscellaneous fees.  Trade accounts receivable not sold remain in the Company's custody and control and the Company maintains all credit risk on those accounts.

Under the agreement with ABN, the Company can borrow up to approximately $1.3 million (Euro 1,000,000), limited to 40% of its trade accounts.  The factor fee is 0.26% of the customer invoice including VAT and interest is charged on the amount financed at the one month Euribor interest rate plus 1.2%. The interest rate under the agreement was 1.69% per annum at December 31, 2012. As of December 31, 2012 and June 30, 2012, $260,643 and $197,039 was due from ABN, respectively.  

Under the agreement with Credit Cooperatif, the Company can borrow up to approximately $325,000 (Euro 250,000).  The factor fee is determined on a case by case basis and is not specified in the agreement. The fee charged for the obligations outstanding as of December 31, 2012 was approximately 5%. As of December 31, 2012 and June 30, 2012, $247,776 and $256,636 was due to Credit Cooperatif, respectively, that relate to funds paid to the Company not yet returned to the factor.   

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

For information about recently issued accounting standards, refer to Note 2 to our Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, the Company is not required to provide the information required by this item.

22

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2012, the Company’s disclosure controls and procedures were effective to ensure that information it is required to disclose in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Inherent Limitations on the Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial Reporting

In addition, our management with the participation of our principal executive officer and principal financial officer have determined that no change in our internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Exchange Act) occurred during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 1, 2012, the Company issued 182,244 shares of common stock, valued at approximately $200,000, to the owner of a customer list in connection with the Company’s purchase of such customer list.

In making the stock issuance described above without registration under the Securities Act of 1933, as amended (the “Securities Act”), the Company relied upon one or more of the exemptions from registration contained in and/or promulgated under Section 4(2) of the Securities Act as no general solicitation or advertising was used in connection with the stock issuance.

Item 6. Exhibits

See “Exhibit Index” on the page immediately following the signature page hereto for a list of exhibits filed as part of this report, which is incorporated herein by reference.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DERYCZ SCIENTIFIC, INC.
	By:	/s/ Peter Derycz
		Peter Derycz
Date: February 14, 2013		Chief Executive Officer
	By:	/s/ Alan Urban
		Alan Urban
Date: February 14, 2013		Chief Financial Officer

24

EXHIBIT INDEX

Exhibit
Number	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase **
101.DEF	XBRL Taxonomy Extension Definition Linkbase**
101.LAB	XBRL Taxonomy Extension Label Linkbase **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase **

** Furnished herewith

25

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION

I, Peter Derycz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Derycz Scientific, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     February 14, 2013	/s/ Peter Derycz
	Peter Derycz
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION

I, Alan Urban, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Derycz Scientific, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:      February 14, 2013	/s/ Alan Urban
	Alan Urban
	Chief Financial Officer   (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Derycz Scientific, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter Derycz, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Peter Derycz

Peter Derycz

Chief Executive Officer (Principal Executive Officer)

February 14, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Derycz Scientific, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan Urban, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Alan Urban

Alan Urban

Chief Financial Officer (Principal Financial and Accounting Officer)

February 14, 2013

XML

Factor Agreements (Details Textual)	Dec. 31, 2012 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2012 Credit Cooperatif [Member] USD ($)	Dec. 31, 2012 Credit Cooperatif [Member] EUR (€)	Dec. 31, 2012 Abn [Member] USD ($)	Dec. 31, 2012 Abn [Member] EUR (€)
Factor Arrangements Maximum Limit					$ 1,300,000	€ 1,000,000
Factor Arrangements Percentage Of Accounts Receivable	40.00%				40.00%	40.00%
Factor Fee Percentage	0.26%				0.26%	0.26%
Factor Interest Rate Spread	1.20%				1.20%	1.20%
Factor Interest Rate Percentage Year End	5.00%				1.69%	1.69%
Due From Factor Current	260,643	197,039
Due to factor	247,776	256,636
Factor Arrangements Maximum Limit			$ 325,000	€ 250,000

XML

Line of Credit

6 Months Ended

Dec. 31, 2012

Line Of Credit Facility [Abstract]

Line Of Credit Facility Disclosure [Text Block]

Note 3 — Line of Credit

The Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which as amended, provides for a $4,000,000 revolving line of credit that matures on October 31, 2013.  On February 8, 2012, the Company entered into an Amendment to the Loan and Security Agreement pursuant to which SVB waived our failure to comply with the minimum tangible net worth financial covenant set forth in the Loan Agreement for the compliance period ended December 31, 2011, the parties agreed to amend the minimum tangible net worth required for various periods in calendar year 2012, and the parties agreed that the principal amount outstanding under the revolving line shall accrue interest at the prime rate plus 2.5% for periods in which the Company maintains an account balance with SVB (less all indebtedness owed to SVB) of at least $800,000 at all times during the prior calendar month (the “Streamline Period”), and at the prime rate plus 4.5% when a Streamline Period is not in effect. The interest rate on the line of credit was 6.5% as of December 31, 2012.  The line of credit is secured by all of the Company’s and its subsidiaries’ assets, excluding TAAG’s assets.  

The line of credit is subject to certain financial and performance covenants which the Company was in compliance with as of December 31, 2012.  The balance outstanding as of December 31, 2012, and June 30, 2012 was $100,000 and $1,000,000, respectively.  As of December 31, 2012 and June 30, 2012, approximately $3,700,000 and $1,875,000, respectively, of available credit was unused under the line of credit.

XML

Stockholders' Equity (Details 3) (USD $)	6 Months Ended
	Dec. 31, 2012
Options Warrant Outstanding	1,370,898
Options Warrant Exercisable	1,119,731
Warrant [Member]
Options Warrant Outstanding	2,376,173
Options Warrant Exercisable	2,376,173
Range One [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 1.19
Options Warrant Outstanding	150,000
Options Warrant Outstanding Remaining Contractual Life (in years)	8 years 11 months 23 days
Options Warrant Exercisable	150,000
Range Two [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 1.25
Options Warrant Outstanding	150,000
Options Warrant Outstanding Remaining Contractual Life (in years)	1 year 10 months 6 days
Options Warrant Exercisable	150,000
Range Three [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 1.75
Options Warrant Outstanding	333,331
Options Warrant Outstanding Remaining Contractual Life (in years)	1 year 10 months 21 days
Options Warrant Exercisable	333,331
Range Four [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 2.00
Options Warrant Outstanding	1,081,175
Options Warrant Outstanding Remaining Contractual Life (in years)	9 months 29 days
Options Warrant Exercisable	1,081,175
Range Five [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 2.25
Options Warrant Outstanding	266,667
Options Warrant Outstanding Remaining Contractual Life (in years)	1 year 11 months 19 days
Options Warrant Exercisable	266,667
Range Six [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 3.00
Options Warrant Outstanding	390,000
Options Warrant Outstanding Remaining Contractual Life (in years)	1 year 1 month 13 days
Options Warrant Exercisable	390,000
Range Seven [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 3.50
Options Warrant Outstanding	2,500
Options Warrant Outstanding Remaining Contractual Life (in years)	3 years 6 months
Options Warrant Exercisable	2,500
Range Eight [Member] | Warrant [Member]
Options Warrant Exercise Price	$ 4.00
Options Warrant Outstanding	2,500
Options Warrant Outstanding Remaining Contractual Life (in years)	3 years 6 months
Options Warrant Exercisable	2,500

XML

Stockholders' Equity (Details 2) (USD $)	6 Months Ended
	Dec. 31, 2012
Outstanding, June 30, 2012 Number of Warrants	2,576,182
Granted Number of Warrants	0
Exercised Number of Warrants	0
Expired number of warrants	(200,009)
Outstanding, December 31, 2012 Number of warrants	2,376,173
Exercisable, June 30, 2012 Number of warrants	2,576,182
Exercisable, December 31, 2012 Number of warrants	2,376,173
Outstanding, June 30, 2012 Weighted Average Exercise Price	$ 2.06
Granted Weighted Average Exercise Price	$ 0
Exercised Weighted Average Exercise Price	$ 0
Expired Weighted Average Exercise Price	$ 2.00
Outstanding December 31, 2012 Weighted Average Exercise Price	$ 2.06
Exercisable, June 30, 2012 Weighted Average Exercise Price	$ 2.06
Exercisable, December 31, 2012 Weighted Average Exercise Price	$ 2.06

XML

Stockholders' Equity (Details Textual) (USD $)	0 Months Ended	6 Months Ended
	Nov. 01, 2012	Dec. 31, 2012	Dec. 31, 2011	Jul. 20, 2012	Jun. 30, 2012	Nov. 15, 2012 Minimum [Member]	Nov. 15, 2012 Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		1,555,769				1,500,000	3,000,000
Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2		6 years 11 months 19 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term		6 years 6 months 18 days
Fair value of vested stock options		$ 110,406	$ 84,438
Unallocated Share Based Compensation		239,529
Common Stock Issued, Employee Stock Trust				73,333
Common stock, shares issued		17,269,525		17,844	17,069,437
Stock Issued During Period Shares Customers	182,244
Common stock; $0.001 par value; 100,000,000 shares authorized; 16,822,509 and 13,001,830 shares issued and outstanding	$ 200,000	$ 17,269			$ 17,069
Percentage Of Earn Out Revenue	6.50%
Estimated Useful Life Of Customer List		2 years

XML

Geographical Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2012
Revenue	$ 13,982,098	$ 12,089,519	$ 23,524,097	$ 21,950,738
Cost of revenue	11,223,397	10,310,259	18,608,552	18,699,001
Selling, general and administrative expenses	2,414,701	3,003,386	4,405,411	5,630,831
Depreciation and amortization	134,914	480,094	321,572	966,095
Income (loss) from operations	209,086	(1,704,220)	188,562	(3,345,189)
Current assets	13,536,961		13,536,961		10,401,691
Property and equipment, net	1,123,800		1,123,800		1,294,517
Total assets	15,065,001		15,065,001		12,005,920
Current liabilities	14,565,465		14,565,465		11,573,859
Total liabilities	15,175,215		15,175,215		12,440,484
US Operations [Member]
Revenue	11,544,064		18,647,223
Cost of revenue	9,848,155		15,685,344
Selling, general and administrative expenses	1,242,750		2,365,597
Depreciation and amortization	43,191		137,467
Income (loss) from operations	409,968		458,815
Current assets	10,747,171		10,747,171		7,765,813
Property and equipment, net	268,081		268,081		300,831
Intangible assets, net and goodwill	143,075		143,075		65,510
Other non-current assets	16,753		16,753		27,155
Total assets	11,175,080		11,175,080		8,159,309
Current liabilities	9,834,640		9,834,640		7,468,482
Long term liabilities	0		0		0
Total liabilities	9,834,640		9,834,640		7,468,482
TAAG [Member]
Revenue	2,438,034		4,876,874
Cost of revenue	1,375,242		2,923,208
Selling, general and administrative expenses	1,171,951		2,039,814
Depreciation and amortization	91,723		184,105
Income (loss) from operations	(200,882)		(270,253)
Current assets	2,789,790		2,789,790		2,635,878
Property and equipment, net	855,719		855,719		993,686
Intangible assets, net and goodwill	0		0		0
Other non-current assets	244,412		244,412		217,047
Total assets	3,889,921		3,889,921		3,846,611
Current liabilities	4,730,825		4,730,825		4,105,377
Long term liabilities	609,750		609,750		866,625
Total liabilities	$ 5,340,575		$ 5,340,575		$ 4,972,002

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Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

These estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, analysis of impairments of recorded goodwill and intangibles, accruals for potential liabilities and assumptions made in valuing equity instruments issued for services or acquisitions.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. The Company extends credit based on an evaluation of the customer's financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required.

Cash denominated in Euros with a US Dollar equivalent of $462,194 and $763,462 at December 31, 2012 and June 30, 2012, respectively, was held in accounts at financial institutions located in Europe.

The following table summarizes accounts receivable concentrations:

	As of December 31, 2012			As of June 30, 2012
Customer A		34	%		18	%

The following table summarizes revenue concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Customer A		23	%		21	%		16	%		13	%

The following table summarizes content cost concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Vendor A		30	%			*		22	%			*
Vendor B		26	%		18	%		22	%		16	%
Vendor C			*		13	%			*		16	%

* Less than 10%

Revenue Recognition

The Company’s policy is to recognize revenue when services have been performed, risk of loss and title to the product transfers to the customer, the selling price is fixed or determinable, and collectability is reasonably assured. We generate revenue by providing three types of services to our customers; document delivery; reprints and eprints; and printing and reprint management.

Document Delivery

Our business model for document delivery services is based on charging our customers a copyright fee necessary to obtain permission of use from the content owner (publisher), and a service fee for delivering the content. We have existing non-exclusive arrangements with many publishers that provide us with electronic access to much of these publishers’ content, which allows us to deliver single copies of such content to our customers in a more efficient and timely manner, often in a matter of minutes. The Company recognizes revenue from document delivery services upon electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Reprints and eprints

Our business model for reprints and eprints is based on charging a fee for aggregating and distributing multiple copies of published materials. When possible, we obtain the right to print the reprints from the holder of the copyright and we print and ship the reprints ourselves. We also have built systems that can provide controlled distribution of electronic copies or eprints. The Company recognizes revenue from reprints and eprints services upon shipment or electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Printing and Reprint Management

Our business model for printing is based on charging a fee for providing printing services and delivering hard copy materials to our customers that are generally used for marketing purposes. In addition, we also provide other printing logistics products and services. These services are complementary to our reprints and eprints, and reprint management services. The Company recognizes revenue from printing services when the printed materials have been shipped to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Stock-based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations.  The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with Topic 718 of the FASB Accounting Standards Codification, whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.  Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

Foreign Currency Translation

The accompanying condensed consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the revenues and costs of TAAG are in Euros. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.

Net Income (Loss) Per Share

Current accounting guidance requires presentation of basic earnings per share and diluted earnings per share.   Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented with a net loss because all warrants and stock options outstanding are anti-dilutive.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share as they would be anti-dilutive because the Company had net losses for the period below:

	As of December 31,
Potentially Dilutive Securities	2011
Warrants		2,576,182
Stock options		1,464,000
		4,040,182

Recently Issued Accounting Pronouncements

In December 2011, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013.  The Company does not expect adoption of this standard to have a material impact on its consolidated financial statement disclosures.

In July 2012, the FASB issued ASU No. 2012-02,  Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment  (ASU 2012-02) ,  allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for the Company in the period beginning January 1, 2013. The Company does not expect the adoption of this update to have a material effect on the consolidated financial statements. 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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Subsequent Events (Details Textual) (USD $)	6 Months Ended
	Dec. 31, 2012
Loss Contingency, Damages Sought, Value	$ 600,000

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Condensed Consolidated Balance Sheets (USD $)	Dec. 31, 2012	Jun. 30, 2012
Assets
Cash and cash equivalents	$ 2,898,285	$ 3,150,978
Accounts receivable:
Trade receivables, net of allowance of $194,353 and $163,455 , respectively	8,872,733	6,099,471
Due from factor	260,643	197,039
Inventory	351,923	363,641
Prepaid expenses	747,783	157,139
Prepaid royalties	401,560	415,339
Other current assets	4,034	18,084
Total current assets	13,536,961	10,401,691
Property and equipment, net of accumulated depreciation of $1,633,942 and $1,369,782 , respectively	1,123,800	1,294,517
Intangible Assets, net of accumulated amortization of $267,126 and $189,783 , respectively	143,075	65,510
Deposits and other assets	261,165	244,202
Total assets	15,065,001	12,005,920
Liabilities and Stockholders' Deficiency
Accounts payable and accrued expenses	13,231,979	9,554,754
Capital lease obligation, current	614,397	640,116
Notes payable, current	44,938	53,452
Due to factor	247,776	256,636
Line of credit	100,000	1,000,000
Deferred revenue	326,375	68,901
Total current liabilities	14,565,465	11,573,859
Notes payable, long term	33,703	53,452
Capital lease obligation, long term	576,047	813,173
Total liabilities	15,175,215	12,440,484
Commitments and contingencies
Stockholders' deficiency:
Preferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock; $0.001 par value; 100,000,000 shares authorized; 17,269,525 and 17,069,437 shares issued and outstanding, respectively	17,269	17,069
Accumulated other comprehensive income (loss)	(4,596)	60,654
Additional paid-in capital	13,936,987	13,671,873
Accumulated deficit	(14,059,874)	(14,184,160)
Total stockholders' deficiency	(110,214)	(434,564)
Total liabilities and stockholders' deficiency	$ 15,065,001	$ 12,005,920

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Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash flow from operating activities:
Net income (loss)	$ 124,286	$ (3,468,961)
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	343,815	1,004,565
Fair value of vested stock options	110,406	84,438
Fair value of warrants issued for services, net of adjustment	0	(237,126)
Fair value of warrant extensions	0	264,714
Gain on sale of fixed assets	(6,879)	0
Changes in operating assets and liabilities:
Accounts receivable	(2,773,262)	(785,273)
Inventory	11,718	167,985
Due from factor	(63,604)	272,186
Prepaid expenses	(590,644)	61,394
Prepaid royalties	13,779	786,449
Deposits and other assets	(2,913)	60,706
Accounts payable and accrued expenses	3,677,225	3,492,110
Deferred revenue and other current liabilities	257,474	94,000
Net cash provided by operating activities	1,101,401	1,797,187
Cash flow from investing activities:
Purchase of property and equipment	(61,810)	(44,607)
Purchase of intangible assets	0	(161,140)
Proceeds from sale of fixed asset	16,357	0
Net cash used in investing activities	(45,453)	(205,747)
Cash flow from financing activities:
Payments to factor	(8,860)	0
Payment of notes payable	(28,263)	(42,249)
Payment of capital lease obligation	(262,845)	(484,835)
Payment of related parties	0	(67,383)
Repayments under line of credit	(900,000)	(661,769)
Net cash used in financing activities	(1,199,968)	(1,256,236)
Effect of exchange rate changes	(108,673)	138,197
Net increase (decrease) in cash and cash equivalents	(252,693)	473,401
Cash and cash equivalents, beginning of period	3,150,978	2,868,260
Cash and cash equivalents, end of period	2,898,285	3,341,661
Supplemental disclosures of cash flow information:
Cash paid for income taxes	1,681	19,629
Cash paid for interest	59,560	123,014
Supplemental disclosures of non-cash investing and financing activities:
Acquisition of customer list through issuance of common shares	$ 154,908	$ 0

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Summary of Significant Accounting Policies (Details 3)	6 Months Ended
	Dec. 31, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,040,182
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,576,182
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,464,000

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Line of Credit (Details Textual) (USD $)	6 Months Ended
	Dec. 31, 2012	Jun. 30, 2012	Feb. 08, 2012 Silicon Valley Bank [Member]	Jul. 23, 2010 Silicon Valley Bank [Member]
Line Of Credit Facility, Amount Outstanding				$ 4,000,000
Line Of Credit Facility Spread On Interest Rate			2.50%
Line Of Credit Facility Minimum Amount Outstanding During Period	800,000
Line of Credit Facility, Interest Rate Description	prime rate plus 4.5%
Line of credit	100,000	1,000,000
Line of Credit Facility, Remaining Borrowing Capacity	$ 3,700,000	$ 1,875,000
Line of Credit Facility, Interest Rate at Period End	6.50%

XML

Organization, Nature of Business and Basis of Presentation

6 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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

Organization

Derycz Scientific, Inc. (the “Company”) 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”); Reprints Desk Latin America S. de R.L. de C.V, an entity organized under the laws of Mexico; and Techniques Appliquées aux Arts Graphiques, S.p.A. (“TAAG”), an entity organized under the laws of France.

Nature of Business

Our mission is to provide information logistics solutions that facilitate the flow of information from the publishers of scientific and technical content to enterprise customers in life science and other research intensive industries around the world. We provide customers with access to hundreds of thousands of newly published articles each year in addition to the tens of millions of existing articles that have been published in the past, helping them to identify the most useful and relevant content for their purposes. We serve both the publishers who own the content rights and the end-users of the content. We utilize web-based platforms as well as traditional delivery channels and are developing products and services that make it easier for our customers to find and legally use information. During the year ended June 30, 2012, we delivered more than 10 million articles in either hard copy or electronic form to over 1,000 customers in over 100 countries.

We provide three types of solutions to our customers; research solutions; marketing solutions; and publisher solutions. 

Research Solutions

Researchers and regulatory personnel generally order single copies of published materials, called “document delivery,” for use in their research activities. In order to use the content, our customers must pay appropriate copyright fees and our services ensure that we have obtained the necessary permissions from the owners of the published content so that our customers’ use of the content complies with applicable copyright laws. We have developed Internet-based interfaces that allow customers to initiate orders and manage transactions, at any time, by specifying the citation or other identifying information related to the particular article they need. In some cases, we are able to fulfill the order without the need for action on the part of our employees. We also help these customers to maximize the information resources they already own or have access to via subscriptions or internal libraries, as well as organize workgroups to collaborate around scientific information. Our services alleviate the need for our customers to develop internal systems or contact multiple publishers in order to obtain the required information.

Marketing Solutions

Generally, marketing departments order large quantities of printed copies of published materials called “reprints” that they distribute to interested parties, including customers and doctors who may prescribe a customer’s products. We print the reprints we deliver to our customers whenever possible and are responsible for any logistics required to distribute such reprints. TAAG also prints other materials that are used for marketing purposes and provides other printing logistics products and services.  Electronic copies, called “eprints,” are also used for distribution through the Internet and other electronic mechanisms. We have also developed eprint software systems that increase the efficiency of our customers’ content purchases by transitioning from paper reprints to electronic eprints. Our software systems also help to improve compliance with copyright and promotional regulations within the life sciences industry.

Publisher Solutions

Our publisher solutions include technology solutions and reprint management services, whereby we are responsible for all aspects of reprint and eprint production for a publisher, from taking orders to final delivery. This service eliminates the need for the publishers to establish a dedicated reprints sales force or arrange for delivery of reprinted materials. Our eprint software systems enable publishers to protect their copyrighted content and support the marketing needs of their customers.

Liquidity

Historically, we have relied upon cash from financing activities to fund substantially all of the cash requirements of our activities and have incurred significant losses and experienced negative cash flow. As of December 31, 2012, the Company had negative working capital of $1,028,504 and shareholders’ deficiency of $110,214. However, for the six months ended December 31, 2012, the Company recorded a net income of $124,286 and cash provided by operating activities was $1,101,401 during this period. We may be unable to sustain or increase our profitability on a quarterly or annual basis and we may incur losses in future periods. An extended period of losses and negative cash flow may prevent us from successfully operating and expanding our business.

 US Operations (Reprints)

The Company believes that its current cash resources and cash flow from US operations will be sufficient to sustain current US operations for the next twelve months. The Company expects to continue to produce cash from US operating activities; however, there are no assurances that such results will be achieved.

TAAG (France)

The Company believes that its current cash resources and cash flow from TAAG may not be sufficient to sustain TAAG operations for the next twelve months. During the six months ended December 31, 2012, TAAG incurred a loss from operations of $270,253, and at December 31, 2012, had a working capital deficiency of $1,941,035. In addition, approximately $700,000 of payroll and VAT taxes were delinquent at December 31, 2012. The Company’s line of credit with Silicon Valley Bank limits the amount of funding of TAAG to $50,000 and no additional financing for TAAG is in place. Revenue from TAAG seems to have stabilized in early 2012, however, continuing net losses have been incurred.  Our overall strategy is to improve TAAG’s revenue, operations, and profitability.  As a result, we have performed, and continue to perform, financial and operational analysis on TAAG.  We have replaced all executive and accounting management at TAAG and hired a new executive manager and engaged a professional accounting services firm to ensure these improvements are implemented, however, there is no assurance that such results will be achieved.  In the event that TAAG liquidates our exposure to creditors in France is limited to the assets of TAAG, with the exception of the property lease which is ultimately guaranteed by Derycz Scientific, Inc. In the event that TAAG liquidates we could lose a significant percentage of revenue, or all revenue, from TAAG. 

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 filed with the SEC. The condensed consolidated balance sheet as of June 30, 2012 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

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.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Jun. 30, 2012
Trade receivables, allowances	$ 194,353	$ 163,455
Property and equipment, accumulated depreciation	1,633,942	1,369,782
Intangible Assets, accumulated amortization	$ 267,126	$ 189,783
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	17,269,525	17,069,437
Common stock, shares outstanding	17,269,525	17,069,437

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Geographical Information (Tables)

6 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Information related to these operating segments, net of eliminations, consists of the following for the periods below:

	Three Months Ended December 31, 2012					Six Months Ended December 31, 2012
	US Operations		TAAG (France)			US Operations		TAAG (France)
Revenue	$	11,544,064	$	2,438,034		$	18,647,223	$	4,876,874
Cost of revenue		9,848,155		1,375,242			15,685,344		2,923,208
Selling, general and administrative expenses		1,242,750		1,171,951			2,365,597		2,039,814
Depreciation and amortization		43,191		91,723			137,467		184,105
Income (loss) from operations	$	409,968	$	(200,882	)	$	458,815	$	(270,253	)

	As of December 31, 2012				As of June 30, 2012
	US Operations		TAAG (France)		US Operations		TAAG (France)
Current assets	$	10,747,171	$	2,789,790	$	7,765,813	$	2,635,878
Property and equipment, net		268,081		855,719		300,831		993,686
Intangible assets, net and goodwill		143,075		-		65,510		-
Other non-current assets		16,753		244,412		27,155		217,047
Total assets	$	11,175,080	$	3,889,921	$	8,159,309	$	3,846,611
Current liabilities	$	9,834,640	$	4,730,825	$	7,468,482	$	4,105,377
Long term liabilities		-		609,750		-		866,625
Total liabilities	$	9,834,640	$	5,340,575	$	7,468,482	$	4,972,002

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Document and Entity Information	6 Months Ended
	Dec. 31, 2012	Feb. 02, 2013
Document Information [Line Items]
Entity Registrant Name	Derycz Scientific Inc
Entity Central Index Key	0001386301
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	dysc
Entity Common Stock Shares Outstanding		17,269,525
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2013

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Organization, Nature of Business and Basis of Presentation (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2012
Operating Income (Loss)	$ 209,086	$ (1,704,220)	$ 188,562	$ (3,345,189)
Net cash provided by (used in) operating activities			1,101,401	1,797,187
Stockholders' Equity Attributable To Parent	(110,214)		(110,214)		(434,564)
Net income for the period			124,286	(3,468,961)
Negative Working Capital	1,028,504		1,028,504
Taag [Member]
Operating Income (Loss)			(270,253)
Woking Capital Deficit	1,941,035		1,941,035
Taxes Payable	50,000		50,000
Accrued Payroll Taxes, Current	$ 700,000		$ 700,000

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Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Revenue	$ 13,982,098	$ 12,089,519	$ 23,524,097	$ 21,950,738
Cost of revenue	11,223,397	10,310,259	18,608,552	18,699,001
Gross profit	2,758,701	1,779,260	4,915,545	3,251,737
Operating expenses:
Selling, general and administrative	2,414,701	3,003,386	4,405,411	5,630,831
Depreciation and amortization	134,914	480,094	321,572	966,095
Total operating expenses	2,549,615	3,483,480	4,726,983	6,596,926
Income (loss) from operations	209,086	(1,704,220)	188,562	(3,345,189)
Gain on sale of fixed assets	0	0	6,879	0
Interest expense	(22,723)	(71,319)	(59,560)	(123,013)
Other income (expense)	(6,956)	17,773	(9,914)	18,870
Income (loss) before provision for income taxes	179,407	(1,757,766)	125,967	(3,449,332)
Provision for income taxes	(1,088)	(19,629)	(1,681)	(19,629)
Net income (loss)	178,319	(1,777,395)	124,286	(3,468,961)
Other comprehensive income (loss):
Foreign currency translation	(37,603)	14,337	(65,250)	33,940
Comprehensive income (loss)	$ 140,716	$ (1,763,058)	$ 59,036	$ (3,435,021)
Net income (loss) per share:
Basic (In dollars per share)	$ 0.01	$ (0.10)	$ 0.01	$ (0.20)
Diluted (In dollars per share)	$ 0.01	$ (0.10)	$ 0.01	$ (0.20)
Weighted average shares outstanding:
Basic (In shares)	17,208,117	17,069,437	17,145,856	17,022,467
Diluted (In shares)	17,208,117	17,069,437	17,175,663	17,022,467

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Geographical Information

6 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 6 — Geographical Information

As of December 31, 2012, the Company had two reportable diverse geographical concentrations:  US Operations and TAAG, which operates in France.  Information related to these operating segments, net of eliminations, consists of the following for the periods below:

	Three Months Ended December 31, 2012					Six Months Ended December 31, 2012
	US Operations		TAAG (France)			US Operations		TAAG (France)
Revenue	$	11,544,064	$	2,438,034		$	18,647,223	$	4,876,874
Cost of revenue		9,848,155		1,375,242			15,685,344		2,923,208
Selling, general and administrative expenses		1,242,750		1,171,951			2,365,597		2,039,814
Depreciation and amortization		43,191		91,723			137,467		184,105
Income (loss) from operations	$	409,968	$	(200,882	)	$	458,815	$	(270,253	)

	As of December 31, 2012				As of June 30, 2012
	US Operations		TAAG (France)		US Operations		TAAG (France)
Current assets	$	10,747,171	$	2,789,790	$	7,765,813	$	2,635,878
Property and equipment, net		268,081		855,719		300,831		993,686
Intangible assets, net and goodwill		143,075		-		65,510		-
Other non-current assets		16,753		244,412		27,155		217,047
Total assets	$	11,175,080	$	3,889,921	$	8,159,309	$	3,846,611
Current liabilities	$	9,834,640	$	4,730,825	$	7,468,482	$	4,105,377
Long term liabilities		-		609,750		-		866,625
Total liabilities	$	9,834,640	$	5,340,575	$	7,468,482	$	4,972,002

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Stockholders' Equity

6 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 5 — Stockholders’ Equity

Stock Options

On December 21, 2007, the Company established the 2007 Equity Compensation Plan (the “Plan”) as approved by our Board of Directors and stockholders. On November 15, 2012, the maximum number of shares of common stock that may be issued pursuant to awards granted under the Plan increased from 1,500,000 to 3,000,000, as approved by our Board of Directors and stockholders. The majority of awards issued under the Plan vest immediately or over three years, and have a term of ten years. There were 1,555,769 shares available for grant under the Plan as of December 31, 2012. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and recognized over the requisite service period, which is generally the vesting period.

The following table summarizes vested and unvested options activity:

	All Options					Vested Options					Unvested Options
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at June 30, 2012		1,471,167		$	1.27		1,141,666		$	1.27		329,500		$	1.29
Granted		53,898			1.07		35,565			1.07		18,333			1.07
Options vesting		-			-		96,667			1.25		(96,667	)		1.25
Exercised		(73,333	)		1.01		(73,333	)		1.01		-			-
Forfeited/Cancelled		(80,834	)		1.82		(80,834	)		1.82		-			-
Outstanding at December 31, 2012		1,370,898		$	1.25		1,119,731		$	1.24		251,166		$	1.30

 The weighted average remaining contractual life of all options outstanding as of December 31, 2012 was 6.97 years. The weighted average remaining contractual life for options vested and exercisable at December 31, 2012 was 6.55 years. Furthermore, there was no intrinsic value for all options outstanding as of December 31, 2012, or for options vested and exercisable at December 31, 2012, in each case based on the fair value of the Company’s common stock on December 31, 2012. The total fair value of options vested during the six months ended December 31, 2012 was $110,406 and is included in selling, general and administrative expenses in the accompanying statement of operations.  As of December 31, 2012, the amount of unvested compensation related to these options was $239,529 which will be recorded as an expense in future periods as the options vest.

On July 20, 2012, a former employee exercised options to purchase 73,333 shares of the Company’s common stock on a cashless basis.  The Company issued 17,844 shares of common stock as a result of the exercise.

Additional information regarding stock options outstanding and exercisable as of December 31, 2012 is as follows:

Option Exercise Price	Options Outstanding		Remaining Contractual Life (in years)		Options Exercisable
$1.00		352,000		6.41		352,000
1.02		289,000		7.58		240,833
1.07		53,898		9.79		35,565
1.30		263,000		9.18		87,667
1.50		385,000		5.06		385,000
3.00		15,000		8.04		10,000
3.05		10,000		8.12		6,666
3.65		3,000		8.22		2,000
Total		1,370,898				1,119,731

Warrants

The following table summarizes warrant activity:

				Weighted
				Average
	Number of			Exercise
	Warrants			Price
Outstanding, June 30, 2012		2,576,182		$	2.06
Granted		-			-
Exercised		-			-
Expired		(200,009	)		2.00
Outstanding, December 31, 2012		2,376,173		$	2.06
Exercisable, June 30, 2012		2,576,182		$	2.06
Exercisable, December 31, 2012		2,376,173		$	2.06

There was no intrinsic value for all warrants outstanding as of December 31, 2012, based on the fair value of the Company’s common stock on December 31, 2012.

Additional information regarding warrants outstanding and exercisable as of December 31, 2012 is as follows:

Warrant Exercise Price	Warrants Outstanding		Remaining Contractual Life (in years)		Warrants Exercisable
$1.19		150,000		8.98		150,000
1.25		150,000		1.85		150,000
1.75		333,331		1.89		333,331
2.00		1,081,175		0.83		1,081,175
2.25		266,667		1.97		266,667
3.00		390,000		1.12		390,000
3.50		2,500		3.50		2,500
4.00		2,500		3.50		2,500
Total		2,376,173				2,376,173

Shares Issued for Customer List

On November 1, 2012, the Company purchased a customer list for 182,244 shares of common stock valued at approximately $200,000, and an earnout of up to 6.5% of revenue derived from the customer list over a two year period.  The customer list will be amortized over an estimated useful life of 2 years.

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Summary of Significant Accounting Policies (Details Textual) (USD $)	Dec. 31, 2012	Jun. 30, 2012
Cash, FDIC Insured Amount	$ 250,000
Europe Financial Institutions [Member]
Deposits	$ 462,194	$ 763,462

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Summary of Significant Accounting Policies (Details) (Customer A [Member])	Dec. 31, 2012	Jun. 30, 2012
Customer A [Member]
Percentage Of Accounts Receivable Concentartion	34.00%	18.00%

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

The following table summarizes accounts receivable concentrations:

	As of December 31, 2012			As of June 30, 2012
Customer A		34	%		18	%

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]

The following table summarizes revenue concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Customer A		23	%		21	%		16	%		13	%

Fair Value, Concentration of Risk [Table Text Block]

The following table summarizes content cost concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Vendor A		30	%			*		22	%			*
Vendor B		26	%		18	%		22	%		16	%
Vendor C			*		13	%			*		16	%

* Less than 10%

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share as they would be anti-dilutive because the Company had net losses for the period below:

	As of December 31,
Potentially Dilutive Securities	2011
Warrants		2,576,182
Stock options		1,464,000
		4,040,182

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Subsequent Events

6 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 7 — Subsequent Events

In February 2013, the Company filed a lawsuit against the two former owners and managers of TAAG within the Commercial Court of Evry, France.  The suit alleges mismanagement by the two former owners and managers of TAAG prior to and after the Company’s acquisition of TAAG, and seeks damages of approximately $600,000.  The outcome of this pending litigation is uncertain.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

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

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

These estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, analysis of impairments of recorded goodwill and intangibles, accruals for potential liabilities and assumptions made in valuing equity instruments issued for services or acquisitions.

Concentrations Credit Risk Policy [Policy Text Block]

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. The Company extends credit based on an evaluation of the customer's financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required.

Cash denominated in Euros with a US Dollar equivalent of $462,194 and $763,462 at December 31, 2012 and June 30, 2012, respectively, was held in accounts at financial institutions located in Europe.

The following table summarizes accounts receivable concentrations:

	As of December 31, 2012			As of June 30, 2012
Customer A		34	%		18	%

The following table summarizes revenue concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Customer A		23	%		21	%		16	%		13	%

The following table summarizes content cost concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2012			2011			2012			2011
Vendor A		30	%			*		22	%			*
Vendor B		26	%		18	%		22	%		16	%
Vendor C			*		13	%			*		16	%

* Less than 10%

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company’s policy is to recognize revenue when services have been performed, risk of loss and title to the product transfers to the customer, the selling price is fixed or determinable, and collectability is reasonably assured. We generate revenue by providing three types of services to our customers; document delivery; reprints and eprints; and printing and reprint management.

Document Delivery

Our business model for document delivery services is based on charging our customers a copyright fee necessary to obtain permission of use from the content owner (publisher), and a service fee for delivering the content. We have existing non-exclusive arrangements with many publishers that provide us with electronic access to much of these publishers’ content, which allows us to deliver single copies of such content to our customers in a more efficient and timely manner, often in a matter of minutes. The Company recognizes revenue from document delivery services upon electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Reprints and eprints

Our business model for reprints and eprints is based on charging a fee for aggregating and distributing multiple copies of published materials. When possible, we obtain the right to print the reprints from the holder of the copyright and we print and ship the reprints ourselves. We also have built systems that can provide controlled distribution of electronic copies or eprints. The Company recognizes revenue from reprints and eprints services upon shipment or electronic delivery to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Printing and Reprint Management

Our business model for printing is based on charging a fee for providing printing services and delivering hard copy materials to our customers that are generally used for marketing purposes. In addition, we also provide other printing logistics products and services. These services are complementary to our reprints and eprints, and reprint management services. The Company recognizes revenue from printing services when the printed materials have been shipped to the customer only when the selling price is fixed or determinable, and collectability is reasonably assured.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations.  The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with Topic 718 of the FASB Accounting Standards Codification, whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.  Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The accompanying condensed consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the revenues and costs of TAAG are in Euros. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) Per Share

Current accounting guidance requires presentation of basic earnings per share and diluted earnings per share.   Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented with a net loss because all warrants and stock options outstanding are anti-dilutive.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share as they would be anti-dilutive because the Company had net losses for the period below:

	As of December 31,
Potentially Dilutive Securities	2011
Warrants		2,576,182
Stock options		1,464,000
		4,040,182

Newaccounting Pronouncements Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In December 2011, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013.  The Company does not expect adoption of this standard to have a material impact on its consolidated financial statement disclosures.

In July 2012, the FASB issued ASU No. 2012-02,  Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment  (ASU 2012-02) ,  allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for the Company in the period beginning January 1, 2013. The Company does not expect the adoption of this update to have a material effect on the consolidated financial statements. 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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Stockholders' Equity (Tables)

6 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following table summarizes vested and unvested options activity:

	All Options					Vested Options					Unvested Options
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at June 30, 2012		1,471,167		$	1.27		1,141,666		$	1.27		329,500		$	1.29
Granted		53,898			1.07		35,565			1.07		18,333			1.07
Options vesting		-			-		96,667			1.25		(96,667	)		1.25
Exercised		(73,333	)		1.01		(73,333	)		1.01		-			-
Forfeited/Cancelled		(80,834	)		1.82		(80,834	)		1.82		-			-
Outstanding at December 31, 2012		1,370,898		$	1.25		1,119,731		$	1.24		251,166		$	1.30

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

Additional information regarding stock options outstanding and exercisable as of December 31, 2012 is as follows:

Option Exercise Price	Options Outstanding		Remaining Contractual Life (in years)		Options Exercisable
$1.00		352,000		6.41		352,000
1.02		289,000		7.58		240,833
1.07		53,898		9.79		35,565
1.30		263,000		9.18		87,667
1.50		385,000		5.06		385,000
3.00		15,000		8.04		10,000
3.05		10,000		8.12		6,666
3.65		3,000		8.22		2,000
Total		1,370,898				1,119,731

Schedule Of Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options [Table Text Block]

The following table summarizes warrant activity:

				Weighted
				Average
	Number of			Exercise
	Warrants			Price
Outstanding, June 30, 2012		2,576,182		$	2.06
Granted		-			-
Exercised		-			-
Expired		(200,009	)		2.00
Outstanding, December 31, 2012		2,376,173		$	2.06
Exercisable, June 30, 2012		2,576,182		$	2.06
Exercisable, December 31, 2012		2,376,173		$	2.06

Schedule Warrants Outstanding and Exercisable [Table Text Block]

Additional information regarding warrants outstanding and exercisable as of December 31, 2012 is as follows:

Warrant Exercise Price	Warrants Outstanding		Remaining Contractual Life (in years)		Warrants Exercisable
$1.19		150,000		8.98		150,000
1.25		150,000		1.85		150,000
1.75		333,331		1.89		333,331
2.00		1,081,175		0.83		1,081,175
2.25		266,667		1.97		266,667
3.00		390,000		1.12		390,000
3.50		2,500		3.50		2,500
4.00		2,500		3.50		2,500
Total		2,376,173				2,376,173

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Summary of Significant Accounting Policies (Details 2)	3 Months Ended				6 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2012		Dec. 31, 2011
Vendor A [Member]
Concentration Risk Percentage1	30.00%		0.00%	[1]	22.00%		0.00%	[1]
Vendor B [Member]
Concentration Risk Percentage1	26.00%		18.00%		22.00%		16.00%
Vendor C [Member]
Concentration Risk Percentage1	0.00%	[1]	13.00%		0.00%	[1]	16.00%

[1] * Less than 10%

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Stockholders' Equity (Details) (USD $)	6 Months Ended
	Dec. 31, 2012
Outstanding at June 30, 2012	1,471,167
Granted Shares	53,898
Options vesting Shares	0
Exercised Shares	(73,333)
Forfeited/Cancelled Shares	(80,834)
Outstanding at December 31, 2012	1,370,898
Outstanding at June 30, 2012 Weighted Average Exercise Price	$ 1.27
Granted Weighted Average Exercise Price	$ 1.07
Options vesting Weighted Average Exercise Price	$ 0
Exercised Weighted Average Exercise Price	$ 1.01
Forfeited/Cancelled Weighted Average Exercise Price	$ 1.82
Outstanding at December 31, 2012 Weighted Average Exercise Price	$ 1.25
Unvested [Member]
Outstanding at June 30, 2012	329,500
Granted Shares	18,333
Options vesting Shares	(96,667)
Exercised Shares	0
Forfeited/Cancelled Shares	0
Outstanding at December 31, 2012	251,166
Outstanding at June 30, 2012 Weighted Average Exercise Price	$ 1.29
Granted Weighted Average Exercise Price	$ 1.07
Options vesting Weighted Average Exercise Price	$ 1.25
Exercised Weighted Average Exercise Price	$ 0
Forfeited/Cancelled Weighted Average Exercise Price	$ 0
Outstanding at December 31, 2012 Weighted Average Exercise Price	$ 1.30
Vested [Member]
Outstanding at June 30, 2012	1,141,666
Granted Shares	35,565
Options vesting Shares	96,667
Exercised Shares	(73,333)
Forfeited/Cancelled Shares	(80,834)
Outstanding at December 31, 2012	1,119,731
Outstanding at June 30, 2012 Weighted Average Exercise Price	$ 1.27
Granted Weighted Average Exercise Price	$ 1.07
Options vesting Weighted Average Exercise Price	$ 1.25
Exercised Weighted Average Exercise Price	$ 1.01
Forfeited/Cancelled Weighted Average Exercise Price	$ 1.82
Outstanding at December 31, 2012 Weighted Average Exercise Price	$ 1.24

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Condensed Consolidated Statement of Stockholders' Equity (USD $)	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Other Comprehensive Income (Loss) [Member]	Total
Balance at Jun. 30, 2012	$ 17,069	$ 13,671,873	$ (14,184,160)	$ 60,654	$ (434,564)
Balance (in shares) at Jun. 30, 2012	17,069,437			0
Fair value of options issued to employees	0	110,406	0	0	110,406
Common shares issued upon exercise of stock options	18	(18)	0	0	0
Common shares issued upon exercise of stock options (in shares)	17,844
Common shares issued for customer list	182	154,726	0	0	154,908
Common shares issued for customer list (in shares)	182,244
Net income for the period	0	0	124,286	0	124,286
Foreign currency translation				(65,250)	(65,250)
Balance at Dec. 31, 2012	$ 17,269	$ 13,936,987	$ (14,059,874)	$ (4,596)	$ (110,214)
Balance (in shares) at Dec. 31, 2012	17,269,525

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Factor Agreements

6 Months Ended

Dec. 31, 2012

Factor Agreements [Abstract]

Significant Agreements Disclosure [Text Block]

Note 4 – Factor Agreements

The Company, through TAAG, has factoring agreements with ABN Amro (“ABN”) and Credit Cooperatif for working capital and credit administration purposes.  Under the agreements, the factors purchase trade accounts receivable assigned to them by the Company.  The accounts are sold (with recourse) at the invoice amount subject to a factor commission and other miscellaneous fees.  Trade accounts receivable not sold remain in the Company's custody and control and the Company maintains all credit risk on those accounts.

Under the agreement with ABN, the Company can borrow up to approximately $1.3 million (Euro 1,000,000), limited to 40% of its trade accounts.  The factor fee is 0.26% of the customer invoice including VAT and interest is charged on the amount financed at the one month Euribor interest rate plus 1.2%. The interest rate under the agreement was 1.69% per annum at December 31, 2012. As of December 31, 2012 and June 30, 2012, $260,643 and $197,039 was due from ABN, respectively.

Under the agreement with Credit Cooperatif, the Company can borrow up to approximately $325,000 (Euro 250,000).  The factor fee is determined on a case by case basis and is not specified in the agreement. The fee charged for the obligations outstanding as of December 31, 2012 was approximately 5%. As of December 31, 2012 and June 30, 2012, $247,776 and $256,636 was due to Credit Cooperatif, respectively, that relate to funds paid to the Company not yet returned to the factor.

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Stockholders' Equity (Details 1) (USD $)	6 Months Ended
	Dec. 31, 2012
Options Outstanding	1,370,898
Options Exercisable	1,119,731
Range One [Member] | Stock Options [Member]
Option Exercise Price	$ 1.00
Options Outstanding	352,000
Options Outstanding Remaining Contractual Life (in years)	6 years 4 months 28 days
Options Exercisable	352,000
Range Two [Member] | Stock Options [Member]
Option Exercise Price	$ 1.02
Options Outstanding	289,000
Options Outstanding Remaining Contractual Life (in years)	7 years 6 months 29 days
Options Exercisable	240,833
Range Three [Member] | Stock Options [Member]
Option Exercise Price	$ 1.07
Options Outstanding	53,898
Options Outstanding Remaining Contractual Life (in years)	9 years 9 months 15 days
Options Exercisable	35,565
Range Four [Member] | Stock Options [Member]
Option Exercise Price	$ 1.30
Options Outstanding	263,000
Options Outstanding Remaining Contractual Life (in years)	9 years 2 months 5 days
Options Exercisable	87,667
Range Five [Member] | Stock Options [Member]
Option Exercise Price	$ 1.50
Options Outstanding	385,000
Options Outstanding Remaining Contractual Life (in years)	5 years 22 days
Options Exercisable	385,000
Range Six [Member] | Stock Options [Member]
Option Exercise Price	$ 3.00
Options Outstanding	15,000
Options Outstanding Remaining Contractual Life (in years)	8 years 15 days
Options Exercisable	10,000
Range Seven [Member] | Stock Options [Member]
Option Exercise Price	$ 3.05
Options Outstanding	10,000
Options Outstanding Remaining Contractual Life (in years)	8 years 1 month 13 days
Options Exercisable	6,666
Range Eight [Member] | Stock Options [Member]
Option Exercise Price	$ 3.65
Options Outstanding	3,000
Options Outstanding Remaining Contractual Life (in years)	8 years 2 months 19 days
Options Exercisable	2,000

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Summary of Significant Accounting Policies (Details 1) (Customer A [Member])	3 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Customer A [Member]
Percentage Of Customer Revenue Concentartion	23.00%	21.00%	16.00%	13.00%