Note 5 – Goodwill

During the three and nine months ended June 30, 2011 the following changes were made to goodwill:

Three months ended June 30, 2011

On April 4, 2011, the Company acquired the rights to six biomedical technologies invented or co-invented by Dr. Daniel Ericson for a purchase price of $300,000, together with certain rights to royalty and milestone payments if these technologies are successfully developed. Dynasil currently believes that these technologies represent exciting technologies, but there can be no assurances that any of these technologies will be successfully commercialized. The purchase price of $300,000, paid in cash, has been recorded as Goodwill while the opportunities are fully assessed.

Prior Activity

On July 19, 2010, Dynasil completed the acquisition of 100% of the issued and outstanding common stock of Hilger Crystals Limited from Newport Corporation. The purchase price was composed of $4 million in cash and a possible additional payment of up to $750,000 (contingent consideration) after eighteen months based on Hilger’s business revenues for the eighteen months following the acquisition. The Company has reassessed the expectations regarding the revenue during the eighteen month period based on twelve months of actual revenues and the forthcoming six months of the period. As a result, the Company has lowered the estimate for the contingent consideration payment to $279,600 from the original $750,000. Goodwill was reduced by $470,400 as was the recorded liability, which is now carried as a current liability.

The Company also reassessed the initial carrying valuations of the property and equipment acquired in the Hilger acquisition. As a result, Property, Plant and Equipment was reduced by $25,495 and Goodwill was increased by the same amount.

Goodwill balance at September 30, 2010	$	13,591,287
Contingent consideration adjustment		(470,400	)
Property, plant & equipment adjustment		25,495
Biomedical technologies		300,000
Goodwill balance at June 30, 2011	$	13,446,382