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Safe Harbor Statement: In conjunction with the provisions of the safe harbor section of the private securities litigation reform act of 1995, this document contains certain forward-looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations and results.
Any statements in this document that are not statements of historical fact may be considered to be forward-looking statements. Written words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “intends,” “goal,” objective,” “seek,” ”attempt” or variations of these or similar words, identify forward-looking statements.
These statements by their nature are estimates of future results only and involve substantial risks and uncertainties. There can be no assurance that actual results will not differ materially from expectations.
2PAGE DERYCZ SCIENTIFIC SAFE HARBOR STATEMENT In conjunction with the provisions of the safe harbor section of the private securities litigation reform act of 1995, this document contains certain forward‐looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations and results. Any statements in this document that are not statements of historical fact may be considered to be forward‐looking statements. Written words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “intends,” “goal,” objective,” “seek,” ”attempt” or variations of these or similar words, identify forward‐looking statements. These statements by their nature are estimates of future results only and involve substantial risks and uncertainties. There can be no assurance that actual results will not differ materially from expectations.
3PAGE DERYCZ SCIENTIFIC INVESTMENT HIGHLIGHTS • Unique content marketplace sitting at the crossroads of the $285 billion Information Services sub‐segment of the $1 trillion Periodicals industry • Industry leading services recognized as a pioneering in a unique market niche • Desirable, proprietary and hard to replicate assets • Experienced management team with a history of creating shareholder value • Technology driven service model with significant operating leverage • Solving time, quality and cost problem for content distribution in transitioning marketplace • Proven track record of dynamic revenue growth and financial performance
5PAGE DERYCZ SCIENTIFIC SITTING AT THE CENTER OF THE INFORMATION SERVICES VALUE CHAIN Clients rely on DYSC to deliver timely access to mission critical content used to make strategic decisions on a daily basis PUBLISHERS CUSTOMERS
6PAGE DERYCZ SCIENTIFIC Changing an Industry via the Internet Industry Status Quo Internet Revolutionary New Paradigm Travel agencies dominated, Buy tickets, rent cars, book hotel rooms online, power disintermediation rules shifts to consumer Big box stores, malls, retail outlets One click to purchase, buy online via credit cards File sharing shakes up industry, model is evolving to Record stores selling entire CDs buying songs for $0.99 Newspapers, classifieds, flea The most successful online business has become the markets, auctions largest online marketplace Paper resumes & experience search Electronic resumes, employer & employee screening firms tools Costly, inefficient, inaccurate High quality, cost effective data collection
7 PAGE DERYCZ SCIENTIFIC DYSC TIMELINE Pools Press is Reprints Desk Reprints Desk Derycz Scientific TDI Library Acquired by Ranked First in Launches Reports 121% Services Derycz Outsells Premier Product: Revenue Increase transitions Scientific Document Mighty Linkout for Second Fiscal customer Delivery Study Machine Quarter 2010 base to Reprints Desk11/2006 2/2007 3/2008 4/2008 2/2009 6/2009 12/2009 2/2010 11/2010 12/2010 2/2011 Peter Derycz DYSC Reprints Desk Derycz Scientific EContent Derycz Scientific founds DYSC Becomes a Named to Delivers Five‐ Magazine Names reports record Public "KMWorld Millionth Article Derycz Scientific revenues for Company 100 of 2009 Subsidiary One of 2011 fiscal Companies 100 Companies second quarter that Matter in That Matter Most Knowledge in the Digital Announces Management" Content Industry potential List acquisition of European logistics services provider
8PAGE DERYCZ SCIENTIFIC THE DYSC PLATFORM DYSC provides a DERYCZ controlled marketplace that brings together SCIENTIFIC premium publishers of specialized journals and periodicals with Corporate Consumers relying on such content and data for strategic decision making. • Recently ranked #1 by industry analyst • Print‐on‐Demand Services for Outsell Copyright and Regulatory sensitive printing • Provides reprints, ePrints and single copies of articles to its customers • Acquired majority stake in Feb 2007 and launched new services and • Copyright Management & Enforcement branding in 2008 services for publishers • Logistics management for corporate • Specialized and proprietary approaches communications to content workflow management • Integrated services are currently under development
9PAGE DERYCZ SCIENTIFIC DYSC PRODUCT PORTFOLIO DYSC offers its PRODUCT DESCRIPTION clients a Mighty Linkout Machine is an article retrieval solution that increases end comprehensive MIGHTY LINKOUT MACHINE user satisfaction and significantly reduces document delivery costs – with platform to address no maintenance costs and no IT involvement. their content Single article administration and same‐day delivery with most articles management needs delivered within a few minutes to a few hours, original and clean color STM DOCUMENT DELIVERY articles by default, PDFs without plug‐ins, and flexible ordering options. Optional Rightsphere rights management integration is also available. Scientific journal article aggregation and preparation, enabling inclusion eCTD ARTICLE SERVICE within the reference sections of electronic Common Technical Document (eCTD) submissions made to the FDA and other regulatory agencies. Global article reprints procurement solution that enables healthcare and healthcare communications companies to efficiently manage and REPRINTS NRx effectively utilize scientific journal articles to increase product prescriptions and sales. Group purchasing software service that consolidates fragmented article reprint buying to deliver a global spending view and unlock company REPRINTS GPO purchasing power for savings on annual and per order bulk article reprint purchases. Outsourcing service that enables STM publishers to unlock the full financial value of their content by enabling Reprints Desk to manage all PUBLISHER SERVICE BUREAU or part of their journal article reprints business – order management, short‐run and full web press printing, proactive sales promotion, and secure ePrint hosting.
10PAGE DERYCZ SCIENTIFIC BUSINESS MODEL: THE RIGHT CONTENT AT THE RIGHT PLACE AT THE RIGHT TIME • The Problem: – ABC Pharmaceuticals has just released a prescription drug it believes is superior to that of an established competitor • A few seminal scientific articles prove this and ABC would like to distribute 100,000 print and electronic copies of these articles to physicians • The Solution: – DYSC provides a platform for ABC Pharmaceuticals to procure the desired scientific articles, content and rights in a timely, cost effective, efficient and easy to use fashion
12PAGE DERYCZ SCIENTIFIC A COMPREHENSIVE AND INTEGRATED SOLUTION Copy & Digital Reporting & • Creates direct Rights Management • Allows for efficient Tracking relationships with indexing, searching, publishers of unique • Procures rights to content delivery and • Tools for corporations to content content for Clients use management track, report and share cost effectively costly and hard to find content to enhance productivity and reduce costs DYSC Content Publisher Relations Engine
13PAGE DERYCZ SCIENTIFIC HIGHEST QUALITY SERVICE OFFERING IN THE MARKETPLACE DYSC subsidiary Reprints Desk vaulted to the top of the industry’s rankings against long running incumbents in just its 3rd year of operation and continues to lead the pack year after year. HIGHEST SCORE
14PAGE DERYCZ SCIENTIFIC CLIENT CASE STUDY: “X” Life Sciences Challenges: • Sought to reduce platform fees associated with 3rd party document delivery platform for scientific literature. • Desired elimination of costly expedited (“rush”) service fees. • Looking for comprehensive and integrated product that increased staff productivity Solutions: • Adopted and launched Reprints Desk’s ultra‐rapid article supply system enterprise‐wide. • Immediately transitioned to a full self‐service model for end users with the first line of support pushed to the Reprints Desk. • Seamlessly integrated with existing discovery platforms such as PubMed and OVID. • Deployed a tailored version of Reprints Desk’s article resolver solution that quickly matches orders against subscriptions, then delivers article‐level links. Results: • Eliminated more than $10,000 in annual platform fees and $30,000 in rush delivery surcharges. • Received articles in clean PDF format 100% of the time and improved ordering and delivery speed. • Created user satisfaction and saved time for administrators who no longer had to intervene in document delivery operations. Powered by Reprints Desk, the Literature Services department optimizes spending on scientific literature and supports R&D and medical information with DYSC ultra‐rapid document delivery service.
15PAGE DERYCZ SCIENTIFIC RECOGNIZED BY LEADING CLIENTS & EXPERTS ORGANIZATION DESCRIPTION Peter Derycz named to 2010 "PharmaVoice 100" Readers of PharmaVoice magazine bestowed honor on the 100 most inspiring people in the life sciences industry Reprints Desk ranked #1 by industry analyst Outsell Reprints Desk named among “Top 100 Companies that Matter” by KM World (3nd consecutive year)
16PAGE DERYCZ SCIENTIFIC BUILDING DESIRABLE, PROPRIETARY AND HARD TO REPLICATE ASSETS DYSC has built a Content sustainable Database & competitive Distribution advantage through Platform focusing on establishing core processes and assets that are difficult to recreate or imitate. Trust Relationships with Clients & Publishers DYSC Distribution Platform Reputation for Excellence
17PAGE DERYCZ SCIENTIFIC CAPTURING A GLOBAL MARKET OPPORTUNITY DYSC serves clients globally which helps mitigate the political and economic risk of any given economy and drives penetration into new and emerging markets providing opportunities for rapid growth $24.9m $14.6m $12.2m $3.8m $0.4m 2006 2007 2008 2009 2010
18PAGE DERYCZ SCIENTIFIC INTEGRATION OF DIGITAL INFORMATION AND PHYSICAL LOGISTIC CAPABILITIES Derycz is following Expected strategic acquisition of European Information the Netflix and Amazon models of Logistics Services Company TAAG to serve growing integrating digital European demand. information and logistics capabilities in order to competitive Strategic Value differentiate and • Replicates successful U.S. model with Pools Press aggressively capture • Expand physical presence in Europe market share. • Expand European customer base Financial Value • $13 million in TAAG revenues represent an increase Derycz consolidated revenues of 50% • Immediately accretive to consolidated EBITDA • All stock transaction preserves cash for continued growth Acquisition expected to be completed by March 31, 2011. Life‐science companies are increasingly using scientific literature in evidence‐based promotions and increasingly seeking single‐source suppliers
19PAGE DERYCZ SCIENTIFIC GROWTH STRATEGY Revenues Further Penetrate Market and Take Share Continue to Expand International Expansion Customer Base Develop Broader Industry Resources Develop New Consulting Service Offerings Content Management Platform & Services Further Gain Share of Spend from Existing Customers Increase Sales to Existing Target Most Rapidly Growing Customers Customers Cross‐Sell Full Product Range Pursue Strategic Expand Range of Services Acquisitions Increase Customer Base Time
20PAGE DERYCZ SCIENTIFIC PROVEN MANAGEMENT TEAM ALIGNED WITH SHAREHOLDERS The DYSC Management NAME POSITION BACKGROUND team is deeply Peter Derycz President & CEO 20 year Industry Veteran & Entrepreneur. Grew experienced with Infotrieve (a purveyor of scientific articles) to $32 million unique domain in sales before selling to a group of Private Equity investors in 2003. expertise and a proven Jan Peterson Director & 20+ years in STM (Scientific, Technical, Medical) track record Head of Publisher publishing and content development. Established Relations individual article sales as a legitimate revenue stream for publishers and coined the term “Article Economy”. Scott Ahlberg Head of Corporate 18 years of rights management, product development Services and content distribution. Richard McKilligan CFO & General Counsel Law degree from Cornell Law School, MBA from the University of Chicago and undergraduate degree in Accountancy from the University of Illinois at Urbana‐ Champaign. Member of the State Bar of California, the New York State Bar Association and The Florida Bar. Tracy Forrester Head of Reprint 15 years experience managing reprints and Operations information/library service operations in both the public and private sectors. Marc Nissan Chief Application 13 years of solid experience building stable content Architect delivery and management systems. Ian Palmer Head of Marketing 13 years of marketing management working for content and technology industry leaders including Medscape, Inc., Safari Books Online, LLC, Singular Publishing Group, Inc., and Impinj, Inc. ., an RFID technology provider and previous winner of the Red Herring Top 100 Private Companies of North America Award.
24PAGE DERYCZ SCIENTIFIC GROSS PROFIT MARGIN IS ACCELERATING: LAYING THE FOUNDATION TO SCALE Gross Margin has been growing significantly in absolute dollars (CAGR of 87.1%) while Margin % has reflected recent investments in content and royalties.
25PAGE DERYCZ SCIENTIFIC Consistent Stock Price Appreciation DYSC Price History Compared with the NASDAQ Composite (3/7/10 – 3/7/11)
26PAGE DERYCZ SCIENTIFIC INVESTMENT HIGHLIGHTS • Unique content marketplace sitting at the crossroads of the $285 billion Information Services sub‐segment of the $1 trillion Periodicals industry • Industry leading services recognized as a pioneering in a unique market niche • Desirable, proprietary and hard to replicate assets • Experienced management team with a history of creating shareholder value • Technology driven service model with significant operating leverage • Solving time, quality and cost problem for content distribution in transitioning marketplace • Proven track record of dynamic revenue growth and financial performance