10-Q

U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 MARCH 31, 2014

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.

Commission file number: 000-27503

DYNASIL CORPORATION OF AMERICA

(Exact name of registrant as specified in its charter)

Delaware	22-1734088
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

44 Hunt Street, Watertown, MA	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 668-6855

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 past 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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

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

As of May 5, 2014 there were 15,543,268 shares of common stock, par value $.0005 per share, outstanding.

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

INDEX

		Page
PART 1.   FINANCIAL INFORMATION
Item 1.	Financial Statements
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2014 AND SEPTEMBER 30, 2013		3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2014 AND 2013		5
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED MARCH 31, 2014		6
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2014 AND 2013		7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and  Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.  OTHER INFORMATION		28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	28
Signatures		29

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,		September 30,
	2014		2013
ASSETS
Current Assets
Cash and cash equivalents	$	3,465,644	$	2,436,828
Accounts receivable, net of allowances of $318,792 and $184,775 at March 31, 2014 and September 30, 2013, respectively		2,781,759		3,657,320
Costs in excess of billings and unbilled receivables		1,917,012		1,537,318
Inventories, net of reserves		2,979,550		3,140,244
Prepaid expenses and other current assets		1,387,620		1,291,942
Total current assets		12,531,585		12,063,652
Property, Plant and Equipment, net		4,670,360		4,773,779
Other Assets
Intangibles, net		1,321,561		3,484,583
Goodwill		6,272,228		6,240,983
Deferred financing costs, net		37,739		114,229
Total other assets		7,631,528		9,839,795
Total Assets	$	24,833,473	$	26,677,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	1,976,769	$	9,819,048
Capital lease obligations, current		128,979		124,383
Accounts payable		2,283,275		2,056,262
Deferred revenue		193,890		515,790
Accrued expenses and other liabilities		3,482,572		2,846,850
Total current liabilities		8,065,485		15,362,333
Long-term Liabilities
Long-term debt, net of current portion		3,127,795		-
Capital lease obligations, net of current portion		163,116		232,173
Convertible notes		383,084		-
Pension liability		249,966		249,966
Deferred tax liability		179,927		186,866
Total long-term liabilities		4,103,888		669,005

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (Continued)

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

	March 31,			September 30,
	2014			2013
Stockholders' Equity
Common Stock, $0.0005 par value, 40,000,000 shares authorized, 16,318,753 and 16,224,402 shares issued, 15,508,593 and 15,414,242 shares outstanding at March 31, 2014 and September 30, 2013, respectively.		8,159			8,112
Additional paid in capital		17,722,381			17,476,003
Accumulated other comprehensive income		225,694			152,685
Accumulated deficit		(4,275,305	)		(6,004,570	)
Less 810,160 shares of treasury stock - at cost		(986,342	)		(986,342	)
Total Dynasil stockholders' equity		12,694,587			10,645,888
Noncontrolling interest		(30,487	)		-
Total stockholders' equity		12,664,100			10,645,888
Total Liabilities and Stockholders' Equity	$	24,833,473		$	26,677,226

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2014			2013			2014			2013
Net revenue	$	10,406,458		$	10,484,530		$	21,117,986		$	21,037,805
Cost of revenue		6,047,571			5,843,017			12,308,571			11,890,038
Gross profit		4,358,887			4,641,513			8,809,415			9,147,767
Operating expenses:
Sales and marketing		312,729			486,544			709,534			966,422
Research and development		378,379			573,229			724,577			1,210,358
General and administrative		3,200,552			4,066,682			6,480,546			7,647,216
Impairment of goodwill and long-lived assets		-			6,763,072			-			6,763,072
Total operating expenses		3,891,660			11,889,527			7,914,657			16,587,068
Gain on sale of assets		-			-			(1,186,686	)		-
Income (loss) from operations		467,227			(7,248,014	)		2,081,444			(7,439,301	)
Interest expense, net		209,330			177,159			422,107			363,916
Income (loss) before taxes		257,897			(7,425,173	)		1,659,337			(7,803,217	)
Income tax (credit) provision		4,602			(183,443	)		(39,441	)		(182,145	)
Net income (loss)		253,295			(7,241,730	)		1,698,778			(7,621,072	)
Less: Net loss attributable to noncontrolling interest		(18,300	)		-			(30,487	)		-
Net income (loss) attributable to common stockholders	$	271,595		$	(7,241,730	)	$	1,729,265		$	(7,621,072	)
Net income (loss)	$	253,295		$	(7,241,730	)	$	1,698,778		$	(7,621,072	)
Other comprehensive income (loss):
Foreign currency translation		36,845			(275,360	)		73,009			(245,621	)
Total comprehensive income (loss)	$	290,140		$	(7,517,090	)	$	1,771,787		$	(7,866,693	)
Basic net income (loss) per common share	$	0.02		$	(0.49	)	$	0.11		$	(0.52	)
Diluted net income (loss) per common share	$	0.02		$	(0.49	)	$	0.11		$	(0.52	)
Weighted average shares outstanding
Basic		15,102,023			14,770,943			15,061,890			14,721,733
Diluted		15,285,232			14,770,943			15,216,915			14,721,733

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the six months ended March 31, 2014					Additional		Other													Total
	Common		Common		Paid-in		Comprehensive		Retained			Treasury Stock					Noncontrolling			Stockholders'
	Shares		Amount		Capital		Income		Earnings			Shares		Amount			Interest			Equity
Balance, September 30, 2013		16,224,402	$	8,112	$	17,476,003	$	152,685	$	(6,004,570	)		810,160	$	(986,342	)	$	-		$	10,645,888
Issuance of shares of common stock under employee stock purchase plan		6,138		3		8,468		-		-			-		-			-			8,471
Stock-based compensation costs		88,213		44		237,910		-		-			-		-			-			237,954
Foreign currency translation adjustment		-		-		-		73,009		-			-		-			-			73,009
Net income (loss)		-		-		-		-		1,729,265			-		-			(30,487	)		1,698,778
Balance, March 31, 2014		16,318,753	$	8,159	$	17,722,381	$	225,694	$	(4,275,305	)		810,160	$	(986,342	)	$	(30,487	)	$	12,664,100

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	March 31,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	1,698,778		$	(7,621,072	)
Adjustments to reconcile net income (loss) to net cash:
Stock compensation expense		239,225			210,128
Foreign exchange loss		14,029			(31,275	)
Gain on sale of assets		(1,186,686	)		(87,803	)
Depreciation and amortization		534,773			870,175
Other		73,320			(148,955	)
Impairment of goodwill and long-lived assets		-			6,763,072
Other changes in assets and libilities:
Accounts receivable, net		447,291			1,102,777
Inventories		(531,817	)		(359,106	)
Costs in excess of billings and unbilled receivables		(379,694	)		(19,387	)
Prepaid expenses and other assets		(99,005	)		(84,600	)
Accounts payable		230,348			112,126
Accrued expenses and other liabilities		883,309			(963,447	)
Deferred revenue		(319,565	)		38,178
Net cash provided by (used in) operating activities		1,604,306			(219,189	)
Cash flows from investing activities:
Proceeds from sale of assets		4,357,219			80,252
Purchases of property, plant and equipment		(539,476	)		(215,679	)
Net cash provided by (used in) investing activities		3,817,743			(135,427	)
Cash flows from financing activities:
Proceeds from issuance of common stock		7,200			11,688
Net proceeds from issuance of convertible notes		383,084			-
Principal payments on capital leases		(64,461	)		(21,056	)
Proceeds from long-term debt		141,348			-
Payments on long-term debt		(4,855,832	)		(936,873	)
Net cash used in financing activities		(4,388,661	)		(946,241	)
Effect of exchange rates on cash and cash equivalents		(4,572	)		18,878
Net increase (decrease) in cash and cash equivalents		1,028,816			(1,281,979	)
Cash and cash equivalents, beginning		2,436,828			3,414,880
Cash and cash equivalents, ending	$	3,465,644		$	2,132,901
Supplemental disclosures of cash flow information:
Non cash activities:
Assets purchased under capital leases	$	-		$	386,680

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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DYNASIL CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 - Basis of Presentation and Ability to Continue as a Going Concern

The accompanying consolidated balance sheet as of March 31, 2014, the consolidated statements of operations and comprehensive income (loss) for the three months and six months ended March 31, 2014 and 2013, changes in stockholders’ equity for the six months ended March 31, 2014 and cash flows for the six months ended March 31, 2014 and 2013 of Dynasil Corporation of America and subsidiaries (the “Company”), and the related information contained in these notes have been prepared by management and are unaudited. In the opinion of management, all adjustments (which include normal recurring and nonrecurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles for the periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year.

The preparation of unaudited consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2013 Annual Report on Form 10-K previously filed by the Company with the Securities and Exchange Commission.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company incurred substantial losses from operations for the fiscal years ended September 30, 2013 and 2012 and failed to comply with the financial covenants set forth in the terms of its outstanding loan agreements for the fiscal year ended September 30, 2012 and each of the quarters during the fiscal year ended September 30, 2013. These covenants required the Company to maintain specified ratios of earnings before interest, taxes, depreciation and amortization (EBITDA) to fixed charges and to total/senior debt.

The Company returned to profitability for the three month period ended December 31, 2013 and regained compliance with the financial covenants described above. However Santander Bank, N.A. (“Santander”), the Company’s senior lender, continued to require that it not pay interest due monthly to our subordinated lender, Massachusetts Capital Resource Company, constituting a separate event of default. In addition, Santander advised the Company that it was unwilling to negotiate regarding waivers for our past quarterly covenant violations after we reported that it had regained compliance for the three months ended December 31, 2013.

On May 1, 2014, the Company entered into a three year revolving line of credit arrangement with a new bank for up to $4 million with the amount available for advances determined monthly based on eligible billed and unbilled accounts receivable and inventory. The line of credit is secured by substantially all the Company’s assets. Upon the closing of the loan, the Company repaid the approximately $1.8 million owed the senior lender and the $600,000 of accrued interest due the subordinated lender through April 30, 2014. The subordinated lender also issued a waiver to the Company for prior covenant violations.

As a result, the Company is no longer in default of any of its loan obligations and has reclassified the subordinated debt to a long term liability based on its terms.

The Company considers events or transactions that have occurred after the unaudited consolidated balance sheet date of March 31, 2014, but prior to the filing of the unaudited consolidated financial statements with the SEC on this Form 10-Q, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure, as applicable. Subsequent events have been evaluated through the date of the filing of this Quarterly Report on Form 10-Q with the SEC.

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Note 2 – Businesses Sold

In the first quarter of 2014, the Company sold its lead paint detection and medical instruments businesses which comprised substantially all operating assets of its Instruments segment.

On November 7, 2013, the Company sold its Lead Paint detector business to Protec Instrument Corporation (“Protec”), a wholly owned subsidiary of Laboratoires Protec S.A., a French corporation and former European distributor of the Company’s lead paint detector products. The sales price totaled approximately $1.2 million, including the assumption of certain liabilities by Protec. The transaction also resulted in payment to the Company of approximately $500,000 in satisfaction of outstanding accounts receivable. Concurrently with the sale, the Company and Protec entered into a transition services agreement pursuant to which the Company will provide certain transitional services to Protec for up to five months after closing. The Company used $1.175 million of the proceeds from the sale to reduce its indebtedness to Santander Bank, N.A.

On December 23, 2013, the Company sold its Gamma Medical Probe business to Dilon Technologies, Inc., a Delaware corporation (“Dilon”), for $3.5 million, the assumption of certain liabilities of the Company, and a possible contingent payment. The Agreement also provided for $250,000 of the proceeds to be deposited in escrow for a year, which amount is included in accounts receivable in the Consolidated Balance Sheet. The Asset Purchase Agreement (“Agreement”) contains customary representations, warranties, covenants and indemnification provisions. Concurrently with the sale, the Company and Dilon entered into a transition services agreement pursuant to which the Company will provide certain transitional services to Dilon for up to five months after closing. The Company used $2.75 million of the proceeds from the sale to reduce its indebtedness to Santander Bank, N.A.

In connection with the sales of the businesses discussed above, the Company recorded a gain of $1.2 million which is included in Income from Operations in the three months ended December 31, 2013. The businesses sold constituted substantially all of Instruments segment but did not constitute a component of the business, and therefore did not qualify to be reported as discontinued operations. The assets held for sale at September 30, 2013 included fixed assets, inventory, and intangible customer assets totaling $2.9 million offset by customer deposits of approximately $100,000.

Note 3 – Formation of Xcede Technologies, Inc. Joint Venture

On or about October 1, 2013, the Company formed Xcede Technologies, Inc. (“Xcede”), a joint venture with Mayo Clinic, in order to spin out and separately fund the development of its tissue sealant technology which formerly comprised the majority of its Biomedical segment. Xcede had received a total of approximately $400,000 in funding through March 31, 2014 in the form of Convertible Notes from outside investors including certain directors of the Company. The notes accrue interest at 5%. Upon the closing of a capital stock financing, the outstanding principal amount of the notes plus all accrued but unpaid interest on the notes will be converted into shares of the same capital stock sold in the capital stock financing at a 20% discount to the price per share of that capital stock financing. Alternatively, at any time prior to a capital stock financing the note holders can convert at their option into common stock based on a $5 million valuation.

Xcede is continuing its fund raising efforts as it will require additional funding in connection with human trials expected to commence in the fourth quarter of 2014. Subsequent to March 31, 2014, Xcede has raised approximately $250,000 of additional funds.

Xcede’s common stock is 90% owned by Dynasil Biomedical and, as a result, is included in the Company’s consolidated balance sheet, results of operations and cash flows. Dynasil holds a majority of the seats on Xcede’s board of directors.

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Note 4 - Inventories

Inventories, net of reserves, consists of the following:

	March 31,		September 30,
	2014		2013
Raw Materials	$	1,741,628	$	2,132,962
Work-in-Process		975,194		703,873
Finished Goods		262,728		303,409
	$	2,979,550	$	3,140,244

Note 5 – Intangible Assets

Intangible assets at March 31, 2014 and September 30, 2013 consist of the following:

	Useful	Gross		Accumulated
March 31, 2014	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	888,318	$	375,380	$	512,938
Know How	15		512,000		196,349		315,651
Trade Names	Indefinite		344,639		-		344,639
Biomedical Technologies	5		260,000		111,667		148,333
		$	2,004,957	$	683,396	$	1,321,561

	Useful	Gross		Accumulated
September 30, 2013	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	5,145,638	$	2,645,715	$	2,499,923
Know How	15		512,000		179,283		332,717
Trade Names	15 or Indefinite		547,802		75,856		471,946
Biomedical Technologies	5		300,000		120,003		179,997
		$	6,505,440	$	3,020,857	$	3,484,583

Amortization expense for the three months ended March 31, 2014 and 2013 was $43,667 and $143,506,respectively. Amortization expense for the six months ended March 31, 2014 and 2013 was $88,555 and $324,774, respectively. Estimated amortization expense for each of the next five fiscal years is as follows:

	2014 (6 months)		2015		2016		2017		2018		Thereafter		Total
Acquired Customer Base	$	39,976	$	79,952	$	79,952	$	79,952	$	79,952	$	153,154	$	512,938
Know How		17,067		34,133		34,133		34,133		34,133		162,052		315,651
Biomedical Technologies		30,000		60,000		58,333		-		-		-		148,333
	$	87,043	$	174,085	$	172,418	$	114,085	$	114,085	$	315,206	$	976,922

Note 6 – Goodwill

Goodwill is subject to an annual impairment test. The Company considers many factors which may indicate the requirement to perform additional, interim impairment tests. These include:

· A significant adverse long term outlook for any of its industries;

· An adverse finding or rejection from a regulatory body involved in new product regulatory approvals;

· Failure of an anticipated commercialization of a product or product line;

· Unanticipated competition or the introduction of a disruptive technology;

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· The testing for recoverability under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 of a significant asset group within a reporting unit;

· A loss of key personnel; and

· An expectation that a reporting unit carrying goodwill, or a significant portion of a reporting unit, will be sold or otherwise disposed of.

There were no changes, aside from foreign exchange rate fluctuations, in the carrying value of goodwill during the three and six months ended March 31, 2014.

Note 7 – Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing the net income applicable or loss attributable to common shares by the weighted average number of common shares. Diluted earnings per common share adjusts basic earnings per share for the effects of common stock options, common stock warrants, convertible preferred stock and other potential dilutive common shares outstanding during the periods.

For purposes of computing diluted earnings per share for the three and six months ended March 31, 2014 and 2013, no common stock options were included in the calculation of dilutive shares as all of the 630,532 and 710,532 common stock options outstanding, respectively, had exercise prices above the current quarterly average market price per share and their inclusion is anti-dilutive. Additionally, for the three and six months ended March 31, 2013, no common share equivalents related to stock options or unvested restricted stock were included in the calculation of dilutive shares, since there was a loss from continuing operations and the inclusion of common share equivalents would have been anti-dilutive.

The computation of the weighted shares outstanding for the three months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,102,023		14,770,943
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		183,209		-
Dilutive Average Shares Outstanding		15,285,232		14,770,943

The computation of the weighted shares outstanding for the six months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,061,890		14,721,733
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		155,025		-
Dilutive Average Shares Outstanding		15,216,915		14,721,733

Note 8 - Stock Based Compensation

The fair value of the stock options granted is estimated at the date of grant using the Black-Scholes option pricing model.

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A summary of stock option activity for the six months ended March 31, 2014 and 2013 is presented below:

	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2013		630,532	$	3.33		1.06
Outstanding and exercisable at September 30, 2013		630,532	$	3.33		1.06
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance at March 31, 2014		630,532	$	3.33		0.56
Outstanding and exercisable at March 31, 2014		630,532	$	3.33		0.56

	Options Outstanding			Weighted Average  Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2012		794,483		$	3.34		1.75
Outstanding and exercisable at September 30, 2012		794,483		$	3.34		1.75
Granted		-			-
Exercised		-			-
Cancelled		(83,951	)	$	3.69
Balance at March 31, 2013		710,532		$	3.30		1.41
Outstanding and exercisable at March 31, 2013		710,532		$	3.30		1.41

A summary of restricted stock activity for the six months ended March 31, 2014 and 2013 is presented below:

Restricted Stock Activity for the Six Months ended March 31, 2014	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2013		423,168		$	0.74
Granted		-		$	-
Vested		(50,000	)	$	1.05
Cancelled		-		$	-
Nonvested at March 31, 2014		373,168		$	0.70

Restricted Stock Activity for the Six Months ended March 31, 2013	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2012		127,834		$	1.92
Granted		104,000		$	1.03
Vested		(53,000	)	$	1.21
Cancelled		(20,000	)	$	4.02
Nonvested at March 31, 2013		158,834		$	1.31

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Stock Compensation Expense for the six months ended March 31, 2014 and 2013 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	50,627	$	80,091
Restricted Stock Grants		68,351		53,076
Option Grants		-		2,454
Employee Stock Purchase Plan		601		991
Total	$	119,579	$	136,612

	Six Months Ended		Six Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	101,253	$	132,552
Restricted Stock Grants		136,702		65,694
Option Grants		-		9,813
Employee Stock Purchase Plan		1,270		2,069
Total	$	239,225	$	210,128

At March 31, 2014 there was approximately $103,000 in unrecognized stock compensation cost, which is expected to be recognized over a weighted average period of approximately five months.

Note 9 – Segment, Customer and Geographical Reporting

Segment Financial Information

Dynasil’s business is comprised of four segments: contract research (“Contract Research”), optics (“Optics”), instruments (“Instruments”) and biomedical (“Biomedical”). Within these segments, there is a segregation of reportable units based upon the organizational structure used to evaluate performance and make decisions on resource allocation, as well as availability and materiality of separate financial results consistent with that structure. The Contract Research segment is one of the largest small business participants in U.S. government-funded research. The Optics segment manufactures optical materials, components and coatings. The Instruments segment manufactures specialized instruments used in various applications in the medical, industrial, and homeland security/defense sectors. The Biomedical segment, through Xcede Technologies, Inc., a majority owned, joint venture (“Xcede”), is focused on developing a tissue sealant technology for a wide spectrum of applications though no assurance can be given that this technology will become successfully commercialized.

As discussed in Note 2, substantially all the operating assets of the Instruments segment were sold in the three months ended December 31, 2013.

13

The Company’s segment information for the three months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Three Months Ended March 31,
2014
	Contract Research		Optics		Instruments			Biomedical			Total
Revenue	$	5,614,060	$	4,788,669	$	-		$	3,729		$	10,406,458
Gross Profit		2,441,719		1,919,261		(5,822	)		3,729			4,358,887
Impairment of goodwill		-		-		-			-			-
Operating Income (Loss)		241,938		522,112		(75,585	)		(221,238	)		467,227
Depreciation and Amortization		69,949		183,499		-			15,000			268,448
Capital expenditures		12,028		396,530		-			-			408,558
Intangibles, Net		315,651		857,579		-			148,331			1,321,561
Goodwill		4,938,625		1,333,603		-			-			6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096		$	332,338		$	24,833,473

Results of Operations for the Three Months Ended March 31,
2013
	Contract Research			Optics		Instruments			Biomedical			Total
Revenue	$	5,487,850		$	3,931,766	$	1,014,320		$	50,594		$	10,484,530
Gross Profit		2,647,870			1,481,948		461,101			50,594			4,641,513
Impairment of goodwill		-			-		6,763,072			-			6,763,072
Operating Income (Loss)		232,015			2,336		(7,270,801	)		(211,564	)		(7,248,014	)
Depreciation and Amortization		79,637			184,696		164,384			15,000			443,717
Capital expenditures		(187,425	)		87,536		-			-			(99,889	)
Intangibles, Net		349,786			866,488		2,349,767			209,997			3,776,038
Goodwill		4,938,625			1,197,017		-			-			6,135,642
Total Assets	$	13,332,151		$	9,748,703	$	4,862,956		$	334,658		$	28,278,468

14

The Company’s segment information for the six months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Six Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical			Total
Revenue	$	11,454,502	$	8,887,177	$	772,578	$	3,729		$	21,117,986
Gross Profit		4,971,257		3,516,521		317,908		3,729			8,809,415
Impairment of goodwill		-		-		-		-			-
Operating Income (Loss)		590,332		920,544		966,178		(395,610	)		2,081,444
Depreciation and Amortization		139,496		361,607		2,003		31,667			534,773
Capital expenditures		12,028		527,448		-		-			539,476
Intangibles, Net		315,651		857,579		-		148,331			1,321,561
Goodwill		4,938,625		1,333,603		-		-			6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338		$	24,833,473

Results of Operations for the Six Months Ended March 31,
2013
	Contract Research			Optics		Instruments			Biomedical			Total
Revenue	$	10,398,690		$	8,183,706	$	2,298,358		$	157,051		$	21,037,805
Gross Profit		4,861,923			3,061,891		1,066,902			157,051			9,147,767
Impairment of goodwill		-			-		6,763,072			-			6,763,072
Operating Income (Loss)		231,409			388,012		(7,726,495	)		(332,227	)		(7,439,301	)
Depreciation and Amortization		142,419			370,324		327,432			30,000			870,175
Capital expenditures		(1,095	)		209,682		7,092			-			215,679
Intangibles, Net		349,786			866,488		2,349,767			209,997			3,776,038
Goodwill		4,938,625			1,197,017		-			-			6,135,642
Total Assets	$	13,332,151		$	9,748,703	$	4,862,956		$	334,658		$	28,278,468

Customer Financial Information

For the three and six months ended March 31, 2014 and 2013, the top three customers for the Contract Research segment were various agencies of the U.S. Government. For the three months ended March 31, 2014 and 2013, these customers made up 69% and 64%, respectively, of Contract Research revenue. For the six months ended March 31, 2014 and 2013, these customers made up 67% and 63%, respectively, of Contract Research revenue.

For the three and six months ended March 31, 2014 and 2013, there was no customer in the Optics segment whose revenue represented more than 10% of the total segment revenue.

For the three months ended March 31, 2014, there was no revenue in the Instruments segment. For the three months ended March 31, 2013, the top three customers for the Instruments segment made up 30% of Instruments revenue. For the six months ended March 31, 2014 and 2013, the top three customers for the Instruments segment made up 24% and 32%, respectively, of Instruments revenue.

For the both three and six months ended March 31, 2014 and 2013, the Biomedical segment had one customer whose revenue represented 100% of the total segment revenue.

15

Geographic Financial Information

Revenue by geographic location in total and as a percentage of total revenue, for the three months ended March 31, 2014 and 2013 are as follows:

	Three Months Ended					Three Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,621,552		83	%	$	8,572,033		82	%
Europe		844,963		8	%		847,662		8	%
Other		939,943		9	%		1,064,835		10	%
	$	10,406,458		100	%	$	10,484,530		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the six months ended March 31, 2014 and 2013 are as follows:

	Six Months Ended					Six Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	17,529,282		83	%	$	17,066,521		81	%
Europe		1,674,400		8	%		1,736,003		8	%
Other		1,914,304		9	%		2,235,281		11	%
	$	21,117,986		100	%	$	21,037,805		100	%

Note 10 - Income Taxes

Dynasil Corporation of America and its wholly-owned U.S. subsidiaries file a consolidated federal income tax return and various state returns. The Company’s U.K. subsidiary files tax returns in the U.K.

The Company uses the asset and liability approach to account for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carry forwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates, and tax laws, in the respective tax jurisdiction then in effect.

In assessing the ability to realize the net deferred tax assets, management considers various factors including taxable income in carryback years, future reversals of existing taxable temporary differences, tax planning strategies and projections of future taxable income, to determine whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Based upon the Company’s recent losses and uncertainty of future profits, the Company has determined that the uncertainty regarding the realization of these assets is sufficient to warrant the need for a full valuation allowance against its U.S. net deferred tax assets.

The Company applies the authoritative provisions related to accounting for uncertainty in income taxes. As required by these provisions, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being reached upon ultimate settlement with the relevant tax authority. As of March 31, 2014 and September 30, 2013, the Company has no unrecorded liabilities for uncertain tax positions. Interest and penalty charges, if any, related to uncertain tax positions would be classified as income tax expense in the accompanying consolidated statement of operations. As of March 31, 2014 and September 30, 2013, the Company had no accrued interest or penalties related to uncertain tax positions. The Company currently has no federal or state tax examinations in progress.

16

The effective tax rates were 1.8% and (2.4%) for the three and six months ended March 31, 2014, respectively, and 2.5% and 2.3% for the three and six months ended March 31, 2013, respectively. The rates differ from the U.S. federal statutory income tax rate of 34% primarily due to a full valuation allowance against the Company’s U.S. deferred tax asset.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company’s tax filings for federal and state jurisdictions for the tax years beginning with 2010 are still subject to examination.

Note 11 – Subsequent Events

The Company has evaluated subsequent events through the date that the financial statements were released.

On May 1, 2014, the Company entered into an agreement with Middlesex Savings Bank to establish a revolving line of credit of up to $4 million, subject to availability restrictions described below. Upon the closing of the loan, the Company repaid in full the approximately $1.8 million owed Santander Bank and the $600,000 of accrued interest due, as of April 30, 2014, to Massachusetts Capital Resource Company, its subordinated lender. As a result, as of May 1, 2014, the Company has total indebtedness outstanding consisting of $2.4 million newly drawn senior debt owed to Middlesex Savings Bank and approximately $3.0 million of existing subordinated debt owed to Massachusetts Capital Resource Company due July 2017.

The Bank Loan Agreement provides that the revolving line of credit expires May 2017 and is secured by substantially all the Company's assets. Borrowing availability under the revolving line of credit is determined monthly based on eligible billed and unbilled accounts receivable and inventory. The Company is required to maintain compliance with a debt to service coverage ratio. The interest rate on the loan is equal to the Prime Rate, but in no event less than 3.25%.

ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis should be read in conjunction with our financial statements and the notes thereto in the Dynasil Corporation of America ("Dynasil", the "Company" or "we") Form 10-K for the fiscal year ended September 30, 2013.

General Business Overview

Bank Financing

The Company incurred substantial losses from operations for the years ended September 30, 2013 and 2012 and failed to comply with the financial covenants set forth in the terms of its outstanding loan agreements for the year ended September 30, 2012 and each of the quarters during the year ended September 30, 2013. These covenants required the Company to maintain specified ratios of earnings before interest, taxes, depreciation and amortization (EBITDA) to fixed charges and to total/senior debt.

The Company returned to profitability for the three month period ended December 31, 2013 and regained compliance with the financial covenants referred to above. However our senior lender, continued to request that we not pay interest due monthly to our subordinated lender. The senior lender originally requested we not pay interest beginning in February 2013, and the total amount accrued but unpaid was approximately $500,000 at March 31, 2014. Nonpayment of interest when due is a separate event of default. In addition, the senior lender advised us that it was unwilling to negotiate with the Company regarding waivers for our past quarterly covenant violations after we reported that we had regained compliance for the three months ended December 31, 2013.

On May 1, 2014, the Company entered into a three year revolving line of credit arrangement with a new bank. The line of credit is secured by substantially all the Company’s assets and the amount available for advances is determined monthly based on eligible billed and unbilled accounts receivable and inventory. Upon the closing of the loan, the Company repaid approximately the $1.8 million owed the senior lender and the $600,000 of accrued interest at April 30, 2014 due the subordinated lender. The subordinated lender issued a waiver for our prior covenant violations.

17

As a result, the Company is no longer in default of any of its loan obligations and has reclassified the subordinated debt to a long term liability based on its terms.

Operations

Revenue for the second quarter of fiscal year 2014, which ended March 31, 2014, was $10.4 million, a decrease of $100,000 or 1.0% compared with revenue of $10.5 million for the quarter ended March 31, 2013. The decrease was primarily a result of a $1.0 million decrease in revenues related to the Instruments segment offset by a $900,000 increase in revenues in the Optics segment. The lead paint and medical instruments businesses which comprised substantially all of the Instruments segment were sold in first quarter ended December 31, 2013. The Optics segment increase of $900,000 or 21.8% reflects increases in sales in each of the four business units comprising the Optics segment, including a $350,000 nonrefundable payment received by one of the businesses in connection with previous engineering and design efforts associated with a new customer contract.

Cost of Revenue for the second quarter of 2014 was $6.0 million, an increase of 3.5% compared with $5.8 million for the quarter ended March 31, 2013 primarily as a result of the increased cost of revenue associated with the Contract Research segment as a result of a change in the mix of subcontractor costs to direct labor costs, the latter of which have higher profit margins. Total operating expenses decreased $8.0 million or 67.3% to $3.9 million compared to the three month period ended March 31, 2013 primarily because the Company recorded a $6.8 million impairment charge in the second quarter ended March 31, 2013 to write-down the goodwill and long-lived assets of the Company’s Instruments asset group. Additionally, the lead paint and medical products businesses in the Instruments segment, which were sold in the first quarter of fiscal year 2014, were incurring substantial development costs associated with product refreshes during the second quarter of 2013.

Income from Operations for the quarter ended March 31, 2014 was approximately $500,000 compared with Loss from Operations of ($7.2 million) for the quarter ended March 31, 2013. Net Income was $300,000 or $0.02 per share for the quarter ended March 31, 2014, compared with Net Loss of ($7.2 million), or ($0.49) per share, for the quarter ended March 31, 2013.

We continue to invest in efforts to support growth initiatives for the commercialization of our dual mode detector within the Contract Research segment. The dual mode detector technology began generating revenue in 2012 while still under development. We are currently delivering limited quantities of commercial grade crystals and are working to further improve the size and quality of this product.

Commercialization of technology from our research and development activities and strategic acquisitions are drivers of our future growth and we plan to continue to invest in these growth opportunities, depending upon the availability of capital to fund these endeavors. 

18

Results of Operations

Results of Operations for the Three Months Ended March 31,
2014
	Contract Research		Optics		Instruments			Biomedical			Total
Revenue	$	5,614,060	$	4,788,669	$	-		$	3,729		$	10,406,458
Gross Profit		2,441,719		1,919,261		(5,822	)		3,729			4,358,887
Impairment of goodwill		-		-		-			-			-
Operating Income (Loss)		241,938		522,112		(75,585	)		(221,238	)		467,227
Depreciation and Amortization		69,949		183,499		-			15,000			268,448
Capital expenditures		12,028		396,530		-			-			408,558
Intangibles, Net		315,651		857,579		-			148,331			1,321,561
Goodwill		4,938,625		1,333,603		-			-			6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096		$	332,338		$	24,833,473

Results of Operations for the Three Months Ended March 31,
2013
	Contract Research			Optics		Instruments			Biomedical			Total
Revenue	$	5,487,850		$	3,931,766	$	1,014,320		$	50,594		$	10,484,530
Gross Profit		2,647,870			1,481,948		461,101			50,594			4,641,513
Impairment of goodwill		-			-		6,763,072			-			6,763,072
Operating Income (Loss)		232,015			2,336		(7,270,801	)		(211,564	)		(7,248,014	)
Depreciation and Amortization		79,637			184,696		164,384			15,000			443,717
Capital expenditures		(187,425	)		87,536		-			-			(99,889	)
Intangibles, Net		349,786			866,488		2,349,767			209,997			3,776,038
Goodwill		4,938,625			1,197,017		-			-			6,135,642
Total Assets	$	13,332,151		$	9,748,703	$	4,862,956		$	334,658		$	28,278,468

Total revenue for the three months ended March 31, 2014 decreased slightly to $10.4 million for the three months ended March 31, 2014 from $10.5 million for the three months ended March 31, 2013 as increases in our Optics segment revenues substantially offset the decline in Instruments segment revenue as a result of the sales of the lead paint and medical products businesses that comprised substantially all of the Instruments segment.

Revenue from our Contract Research segment increased approximately $100,000 or 2.3%. Contract Research revenues have remained relatively steady over the most recent four quarters. The research backlog for the Contracts Research segment has declined approximately $5.0 million from September 30, 2013 to $33.0 million at March 31, 2014. In addition to normal business activity, the decrease in backlog in the second quarter ended March 31, 2014 includes removal of a $750,000 contract in which the Company’s RMD subsidiary was a subcontractor. While the Company has not been significantly affected by cuts in government spending to date, the Company continues to closely monitor Federal government R&D spending levels.

The Optics segment revenue increased approximately $900,000 or 21.8% for the three months ended March 31, 2014, as a result of increased volume of sales in each of the four businesses included in the Optics segment. The Instruments segment revenue decline is primarily a result of the sale of the lead paint and medical product businesses in the first quarter ending December 31, 2013.

19

Gross profit for the three months ended March 31, 2014 was $4.4 million, or 41.9% of sales, compared to $4.6 million or 44.3% of sales for the three months ended March 31, 2013. Gross profit as a percent of sales decreased for the Contract Research segment to 43.5% at March 31, 2014 from 48.2% at March 31, 2013 primarily as a result of higher billable material and subcontractor costs for the three months ended March 31, 2014 compared to three months ended March 31, 2013. Billable material and subcontractor costs have lower profit margins than direct labor costs.

Gross profit for the Optics segment increased $400,000 for the three months ended March 31, 2014 compared to the three months ended March 31, 2013. The gross profit margin increased to 40.1% of sales at March 31, 2014 compared to 37.7% of sales for the quarter ended March 31, 2013, primarily as a result of a $350,000 nonrefundable payment received in connection with previous engineering and design efforts associated with a customer contract. The Biomedical segment, through Xcede, is developing a tissue sealant technology which has not been approved for commercial use and consequently has no gross profit.

Total operating expenses for the three months ended March 31, 2014 decreased to $3.9 million, or 37.4% of sales, compared to $11.9 million for the three months ended March 31, 2013, which period included an impairment charge of $6.8 million associated with an interim impairment evaluation performed on the Company’s Products business unit in the Instruments segment. The remaining decrease in total operating expenses is primarily a result of the sale of the lead paint and medical products businesses in the Instruments segment which were incurring substantial product development costs during the first quarter ended March 31, 2013 and a higher level of legal and consulting costs incurred in 2013 as a result of the financial difficulties the Company was experiencing.

Income from Operations for the three months ended March 31, 2014 was $500,000 compared to loss from operations of ($7.2 million) for the three months ended March 31, 2013. This change is largely a result of the $6.8 million impairment charge recorded in the three months ended March 31, 2013. The Company expects to maintain its operating expenses at the current levels.

Net interest expense was increased slightly for the three months ended March 31, 2014 compared with the three months ended March 31, 2013 primarily reflecting the accrual of default interest on the MCRC loan.

Income tax expense for the three months ended March 31, 2014 consisted primarily of state tax expense offset by certain U.K. tax research credits.

Net Income for the three months ended March 31, 2014 was $300,000, or $0.02 in basic earnings per share, compared with Net Loss of ($7.2 million), or ($0.49) in basic earnings per share, for the quarter ended March 31, 2013.

20

Results of Operations – Year to Date

Results of Operations for the Six Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical			Total
Revenue	$	11,454,502	$	8,887,177	$	772,578	$	3,729		$	21,117,986
Gross Profit		4,971,257		3,516,521		317,908		3,729			8,809,415
Impairment of goodwill		-		-		-		-			-
Operating Income (Loss)		590,332		920,544		966,178		(395,610	)		2,081,444
Depreciation and Amortization		139,496		361,607		2,003		31,667			534,773
Capital expenditures		12,028		527,448		-		-			539,476
Intangibles, Net		315,651		857,579		-		148,331			1,321,561
Goodwill		4,938,625		1,333,603		-		-			6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338		$	24,833,473

Results of Operations for the Six Months Ended March 31,
2013
	Contract Research			Optics		Instruments			Biomedical			Total
Revenue	$	10,398,690		$	8,183,706	$	2,298,358		$	157,051		$	21,037,805
Gross Profit		4,861,923			3,061,891		1,066,902			157,051			9,147,767
Impairment of goodwill		-			-		6,763,072			-			6,763,072
Operating Income (Loss)		231,409			388,012		(7,726,495	)		(332,227	)		(7,439,301	)
Depreciation and Amortization		142,419			370,324		327,432			30,000			870,175
Capital expenditures		(1,095	)		209,682		7,092			-			215,679
Intangibles, Net		349,786			866,488		2,349,767			209,997			3,776,038
Goodwill		4,938,625			1,197,017		-			-			6,135,642
Total Assets	$	13,332,151		$	9,748,703	$	4,862,956		$	334,658		$	28,278,468

Revenue for the six months ended March 31, 2014 was flat at $21.1 million compared to $21.0 million for the six months ended March 31, 2013.

Revenue from our Contract Research segment increased $1.1 million or 10.2% for the six months ended March 31, 2014 compared to the same period in 2013. The Contract Research segment revenue reflects a return to more normal levels after a decline resulting from lower billable material and subcontractor costs primarily in the three months ended December 31, 2012.

The Optics segment revenue increased $700,000 or 8.6% for the six months ended March 31, 2014, primarily as a result of the $350,000 nonrefundable payment discussed previously and volume increases at the four businesses included in the Optics segment.

Revenue from our Instruments segment decreased $1.5 million or 66.4% for the six months ended March 31, 2014 compared to the same period in 2013. The Instruments segment revenue decline is primarily a result of the sale of the lead paint and medical product businesses in the first quarter ending December 31, 2013.

Gross profit for the six months ended March 31, 2014 was $8.8 million, or 41.7% of sales, compared to $9.1 million or 43.5% of sales for the six months ended March 31, 2013.

21

Gross profit as a percent of sales decreased for the Contract Research segment to 43.4% at March 31, 2014 from 46.8% at March 31, 2013 primarily as a result of a change in the mix of costs to material, subcontractor and indirect from direct labor which results in lower gross profit margins (although the total contract profitability is unchanged).

Gross profit for the Optics segment increased approximately $500,000 to $3.5 million for the six months ended March 31, 2014 compared to the six months ended March 31, 2013 primarily as a result of higher product revenues and the $350,000 nonrefundable payment described above.

Gross profit for the Instruments segment decreased $800,000 to $300,000 for the six months ended March 31, 2014 from $1.1 million for the six months ended March 31, 2013 primarily a result of the sale of the lead paint and medical product businesses in the first quarter ending December 31, 2013.

The Biomedical segment gross profit equals its revenue because the cost of the funded research is included in research and development expense.

Total operating expenses for the six months ended March 31, 2014 were $7.9 million compared to $16.6 million for the six months ended March 31, 2013. Operating expenses for the six months ended March 31, 2013 included a non-cash impairment charge of $6.8 million. Excluding that charge, operating expenses decreased $2.2 million primarily as a result of the elimination of operating expenses associated with the Instruments segment which was sold in the first quarter ending December 31, 2013 as well as a lower level of legal and consulting costs incurred in 2014.

Income from operations for the six months ended March 31, 2014 was $2.1 million compared to a loss from operations of ($7.4 million) for the prior year comparable period. Excluding the impact of the impairment charge, the loss from operations for the six months ended March 31, 2013 would have been ($700,000). The increase in income of $2.7 million is primarily associated with the $1.2 million gain on the sale of the businesses in the Instruments segment and a $700,000 reduction in losses from operations of the Instruments segment which was sold in the first quarter ended December 31, 2013. The Contract Research and Optics segments had improvements in income from operations for the six months ended March 31, 2014 compared to the six months ended March 31, 2013 of $400,000 and $500,000, respectively.

Net interest expense for the six months ended March 31, 2014 and 2013 was essentially unchanged at $400,000 reflecting a lower interest expense associated with a $6 million reduction in outstanding senior bank debt offset by the accrual of default rate interest on the debt due to our subordinated lender.

Income tax expense for the three months ended March 31, 2014 consisted primarily of state tax expense offset by certain U.K. tax research credits.

Net income for the six months ended March 31, 2014 was $1.7 million or $0.11 per share, compared with a net loss of ($7.6 million), or ($0.52) per share for the six months ended March 31, 2013.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this MD&A also contains non-GAAP financial measures. Specifically, Dynasil has discussed Operating Expenses and Income (Loss) from Operations, in each case excluding the effect of the $6.8 million impairment charge recorded in the second quarter of 2013 to write down the goodwill and long-lived intangible assets of the Company’s Instruments segment. The Company believes that the inclusion of these non-GAAP financial measures helps investors to gain a meaningful understanding of the Company’s core operating results and enhance comparing such performance with prior periods. The non-GAAP financial measures included in this MD&A are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP.

Liquidity and Capital Resources

New Senior Loan Agreement

On May 1, 2014, Dynasil entered into a loan and security agreement (the “Bank Loan Agreement”) and line of credit note (the “Note”) with Middlesex Savings Bank ("Middlesex") pursuant to which Middlesex agreed to provide up to $4 million, subject to the availability restrictions described below, under a revolving line of credit loan to Dynasil for general corporate purposes. The Bank Loan Agreement provides that the loan expires on May 1, 2017, at which time all outstanding principal and unpaid interest shall become due and payable. The Bank Loan Agreement and the Note are secured by (i) a security interest in substantially all of the Company’s personal property and (ii) a sixty-five percent (65%) of the Dynasil’s equity interests in its UK subsidiary, Hilger Crystals, Ltd. Under the note, the borrowing base is determined monthly based on eligible billed and unbilled accounts receivable and eligible inventory. The interest rate under the Note is equal the Prime Rate, but in no event less than 3.25%.

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Upon the closing of the Bank Loan Agreement on May 1, 2014, Dynasil repaid in full the approximately $1.8 million of principal and accrued interest and fees owed to Santander Bank under the Company’s existing Loan and Security Agreement dated as of July 7, 2010, as amended (the “Santander Loan Agreement”), by and between the Company and Santander Bank, N.A. (formerly known as Sovereign Bank, N.A.). In addition, Dynasil used the proceeds from the Bank Loan Agreement to repay $600,000 of accrued interest due to Massachusetts Capital Resource Company. As a result, as of May 1, 2014, the Company has total indebtedness outstanding consisting of $2.4 million newly drawn senior debt owed to Middlesex Savings Bank and approximately $3.0 million of existing subordinated debt owed to Massachusetts Capital Resource Company due July 2017.

The Bank Loan Agreement contains customary representations, warranties and covenants. The Bank Loan Agreement limits Dynasil and its subsidiaries' ability to, among other things: be a party to a merger, incur additional indebtedness, incur liens and make investments, without the prior written consent of the Bank. So long as Dynasil will, after payment, be in compliance with the financial covenant referenced below, the Bank Loan Agreement permits Dynasil to pay dividends and make other distributions. In other circumstances, Dynasil may pay dividends and make other distributions with the prior written consent of the Bank.

The Bank Loan Agreement also contains other terms, conditions and provisions that are customary for commercial lending transactions of this sort. The Bank Loan Agreement requires, at the close of each fiscal quarter, Dynasil to maintain a Debt Service Coverage ratio, as defined, of at least 1.20 to 1.00 on a trailing four quarter basis.

The Bank Loan Agreement provides for events of default customary for credit facilities of this type, including but not limited to non-payment, defaults on other debt, misrepresentation, breach of covenants, representations and warranties, insolvency and bankruptcy, change of management, as defined and the occurrence of a material adverse change, as defined. Upon an event of default, the amounts outstanding under the Bank Loan Agreement may be declared by the Bank to be immediately due and payable and the Bank’s agreement to make advances under the Note may be terminated.

Liquidity Outlook

Net cash as of March 31, 2014 was $3.5 million or approximately $1.1 million more than the net cash of $2.4 million at September 30, 2013. In connection with the refinancing completed on May 1, 2014, the Company used approximately $1.8 million to repay its senior lender in full and to pay $600,000 of interest due its subordinated lender as of April 30, 2014. Based on the collateral calculation as of March 31, 2014, the Company had $2.8 million of availability under the line of credit.

Cash From Operating Activities

 In total, including the changes in accounts receivable and accounts payable and accrued expenses, operating activities generated cash of $1.6 million for the six months ended March 31, 2014.

Cash From Investing and Financing Activities

The Company generated $4.4 million in net proceeds from the sale of its lead paint and medical products businesses and used cash of approximately $500,000 for the purchase of property, plant and equipment for the six months ended March 31, 2014.

Payments of long term debt for the six months ended March 31, 2014 were $4.9 million consisting of $3.9 million in special payments associated with the sale of the two businesses identified above as well as regularly scheduled principal payments to Santander Bank, N.A., the Company’s senior lender. The Company’s Xcede subsidiary raised $400,000 through the issuance of convertible notes through March 31, 2014. Net cash used in financing activities was approximately $4.4 million for the six months ended March 31, 2014.

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Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies or critical accounting estimates since September 30, 2013. We have not adopted any accounting policies since September 30, 2013 that have or will have a material impact on our consolidated financial statements. For further discussion of our accounting policies see the “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013 as well as the notes in this Form 10-Q.

The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition

Revenue from sales of products is recognized at the time title and the risks and rewards of ownership pass. Revenue from research and development activities is derived generally from the following types of contracts: reimbursement of costs plus fees, fixed price or time and material type contracts. Revenue is recognized when the products are shipped per customers’ instructions, the contract has been executed, the contract or sales price is fixed or determinable, delivery of services or products has occurred and the Company’s ability to collect the contract price is considered reasonably assured.

Government funded services revenues from cost plus contracts are recognized as costs are incurred on the basis of direct costs plus allowable indirect costs and an allocable portion of the contracts’ fixed fees. Revenue from fixed-type contracts is recognized under the percentage of completion method with estimated costs and profits included in contract revenue as work is performed. Revenues from time and materials contracts are recognized as costs are incurred at amounts generally commensurate with billing amounts. Recognition of losses on projects is taken as soon as the loss is reasonably determinable.

The majority of the Company’s contract research revenue is derived from the United States government and government related contracts. Such contracts have certain risks which include dependence on future appropriations and administrative allotment of funds and changes in government policies. Costs incurred under United States government contracts are subject to audit. The Company believes that the results of such audits will not have a material adverse effect on its financial position or its results of operations.

Goodwill

Goodwill is subject to an annual impairment test. We consider many factors which may indicate the requirement to perform additional, interim impairment tests. These include:

· A significant adverse long term outlook for any of our industries;

· An adverse finding or rejection from a regulatory body involved in new product regulatory approvals;

· Failure of an anticipated commercialization product line;

· Unanticipated competition or a disruptive technology introduction;

· The testing for recoverability under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 of a significant asset group within a reporting unit;

· A loss of key personnel; and

· An expectation that a reporting unit carrying goodwill, or a significant portion of a reporting unit, will be sold or otherwise disposed of.

Goodwill is tested by reviewing the carrying value compared to the fair value at the reporting unit level. Fair value for the reporting unit is derived using the income approach. Under the income approach, fair value is calculated based on the present value of estimated future cash flows. Assumptions by management are necessary to evaluate the impact of operating and economic changes and to estimate future cash flows. Management’s evaluation includes assumptions on future growth rates and cost of capital that are consistent with internal projections and operating plans.

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The Company generally performs its annual impairment testing of goodwill during the fourth quarter of its fiscal year, or more frequently if events or changes in circumstances indicate that the assets might be impaired. The Company tests impairment at the reporting unit level using the two-step process. The Company’s primary reporting units tested for impairment are Radiation Monitoring Devices, which comprises our Contract Research segment, and Hilger Crystals, a component of our Optics segment.

The carrying value of goodwill in our Instruments segment exceeded the new residual fair value of goodwill in the fourth quarter of 2012, and, as a result, the Company recorded a pre-tax impairment loss of $2.3 million in the quarter ended September 30, 2012. During the second quarter of 2013, the Company performed an interim impairment test of the long lived assets and goodwill associated with its Dynasil Products reporting unit and wrote off goodwill of $4.0 million and $2.8 million of long lived assets other than goodwill for a total write-off of $6.8 million

Intangible Assets

The Company’s intangible assets consist of an acquired customer relationships and trade names of Optometrics Corp. and Hilger Crystals, Ltd., acquired know-how of Radiation Monitoring Devices, Inc. and purchased biomedical technologies within the Biomedical Segment. The Company amortizes its intangible assets with definitive lives over their useful lives, which range from 4 to 15 years, based on the time period the Company expects to receive the economic benefit from these assets.

Impairment of Long-Lived Assets

The Company’s long-lived assets include property, plant and equipment and intangible assets subject to amortization. The Company evaluates long-lived assets for recoverability whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use of the asset and eventual disposition. If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized.

No impairment charge was recorded during the three or six month periods ended March 31, 2014. During the three months ended March 31, 2013, in connection with an interim impairment test of long lived assets and goodwill associated with its Dynasil Products reporting unit, the Company determined that the fair value of the long-lived assets (other than goodwill) of Products was less than the carrying amount of those assets and, as a result, recorded a pre-tax impairment charge of $2.8 million plus a $4.0 million write-off of goodwill as discussed above.

Allowance for Doubtful Accounts Receivable

The Company performs ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer's current credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been minimal, within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of any of our significant customers could have a material adverse effect on the collectability of our accounts receivable and our future operating results.

Stock-Based Compensation

The Company accounts for stock-based compensation using fair value. Compensation costs are recognized for stock options granted to employees and directors. Options and warrants granted to employees and non-employees are recorded as an expense over the requisite service period based on the grant date estimated fair value of the grant, determined using the Black-Scholes option pricing model.

Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our income tax provision (benefit) in each of the jurisdictions in which we operate. This process involves estimating our current income tax provision (benefit) together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We regularly evaluate our ability to recover the reported amount of our deferred income taxes considering several factors, including our estimate of the likelihood of the Company generating sufficient taxable income in future years during the period over which temporary differences reverse.

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RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Currently, GAAP does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, although early adoption is permitted. This ASU will be applied prospectively to all unrecognized tax benefits that exist at the effective date. We have not yet adopted this ASU, and we are currently evaluating the effect it will have on our consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to the U.S. government treasury obligation rate and the London Interbank Offered Rate (LIBOR). This ASU also removes the restriction on using different benchmark rates for similar hedges. This ASU is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company does not currently have any hedging arrangements and therefore will not be materially impacted by the new guidance.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, the parent is required to apply the guidance in subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This ASU is effective prospectively for fiscal years and interim periods beginning after December 15, 2013. This ASU will be applied prospectively to derecognition events occurring after the effective date. Early adoption is permitted. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.

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Forward-Looking Statements

The statements contained in this Quarterly Report on Form 10-Q which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements regarding future events and our future results are based on current expectations, estimates, forecasts, and projections and the beliefs and assumptions of our management, including, without limitation, our expectations regarding results of operations, our compliance with the financial covenants under our loan agreements with Middlesex Savings Bank and Massachusetts Capital Resource Company, Xcede obtaining financing from outside investors, the commercialization of our products including our dual mode detectors, our development of new technologies including at Dynasil Biomedical, our ability to remediate the material weaknesses in our internal control over financial reporting, the adequacy of our current financing sources to fund our current operations, our growth initiatives, our capital expenditures and the strength of our intellectual property portfolio. These forward-looking statements may be identified by the use of words such as “plans,” “intends,” “may,” “could,” “expect,” “estimate,” “anticipate,” “continue” or similar terms, though not all forward-looking statements contain such words. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements due to a number of important factors. These factors that could cause actual results to differ from those anticipated or predicted include, without limitation, our ability to comply with the financial covenants under our outstanding indebtedness, our ability to develop and commercialize our products, including obtaining regulatory approvals, the size and growth of the potential markets for our products and our ability to serve those markets, the rate and degree of market acceptance of any of our products, our ability to address our material weaknesses in our internal controls, general economic conditions, costs and availability of raw materials and management information systems, our ability to obtain and maintain intellectual property protection for our products, competition, the loss of key management and technical personnel, our ability to obtain timely payment of our invoices to governmental customers, litigation, the effect of governmental regulatory developments, the availability of financing sources, our ability to identify and execute on acquisition opportunities and integrate such acquisitions into our business, and seasonality, as well as the uncertainties set forth in the Company’s Annual Report on Form 10-K, filed on December 20, 2013, including the risk factors contained in Item 1a, and from time to time in the Company's other filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3     Quantitative and Qualitative Disclosures About Market Risk.

Dynasil, as a smaller reporting company, is not required to complete this item.

ITEM 4     Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Our Interim Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under 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 a company in the 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. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2014, our Interim Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective.

As disclosed in our Annual Report on Form 10-K for the year ended September 30, 2013, we identified material weaknesses in our internal control over financial reporting as of September 30, 2012. Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) are an integral part of disclosure controls and procedures. These material weaknesses, which are described in detail in our 2012 and 2013 Annual Reports on Form 10-K, can be summarized as relating to: (i) inadequate and ineffective monitoring controls, (ii) inadequate and ineffective control over the periodic financial close process and (iii) inadequate and ineffective controls over cash accounts and accounts receivable function at our RMD division.

The measures that we have identified and implemented to address the material weaknesses are also discussed in detail in our 2013 Form 10-K. The Company believes that it has taken the steps that will remediate the previously identified material weaknesses. However, certain controls designed and implemented during the 2013 fiscal year to address the material weaknesses in the period-end financial reporting process have not been operational for a sufficient period of time to allow management to conclude that they are operating effectively. As a result, management has determined as of March 31, 2014 that, collectively the control deficiencies that existed in the prior year still exist and aggregate to the material weaknesses described above, and, that our internal controls do not effectively mitigate the risk that a material misstatement in our financial statements could occur and not be prevented or detected. We expect the evaluation and testing of the steps previously taken to remediate the previously identified material weaknesses will continue throughout fiscal year 2014 in order to allow management sufficient basis to conclude that the controls are operating effectively.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1A.  RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2013, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Risks Related to our Business

Our new loan agreement imposes restrictions on our ability to take certain corporate actions and raise additional capital, imposes a financial covenant regarding debt service coverage and includes a material adverse change (“MAC”) clause.

The Bank Loan Agreement with Middlesex Savings Bank limits Dynasil’s and its subsidiaries' ability to, among other things: be a party to a merger, incur additional indebtedness, pay dividends or make other distributions, incur liens and make investments, without the prior written consent of Middlesex Savings Bank. The Bank Loan Agreement requires, at the close of each fiscal quarter, that Dynasil maintain a Debt Service Coverage ratio, as defined, of at least 1.20 to 1.00 on a trailing four quarter basis.

These restrictions could significantly hamper our ability to raise additional capital. Our ability to receive the necessary approvals is largely dependent upon our relationship with our lenders and our financial performance, and no assurances can be given that we will be able to obtain the necessary approvals in the future. Our inability to raise additional capital could lead to working capital deficits that could have a material adverse effect on our operations in future periods.

The Bank Loan Agreement also includes a MAC clause which permits Middlesex to call the loan if any event, fact, circumstance, change in, or effect on the Company could reasonably be expected to be materially adverse to the business.

ITEM 6     Exhibits

(a) Exhibits and index of Exhibits

31.1(a) Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1(b) Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed for purposes of the Securities Exchange Act of 1934).

99.1 Press release, dated May 12, 2014 issued by Dynasil Corporation of America announcing its financial results for the quarter ended March 31, 2014.

101** The following materials from Dynasil Corporation of America’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets as of March 31, 2014 and September 30, 2013, (ii) Consolidated Statements of Operations for the three and six months ended March 31, 2014 and 2013, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the six months ended March 31, 2014; (iv) Consolidated Statements of Cash Flows for the six months ended March 31, 2014 and 2013, and (v) Notes to Consolidated Financial Statements.

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** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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.

DYNASIL CORPORATION OF AMERICA

BY:	/s/ Peter Sulick	DATED: May 12, 2014
	Peter Sulick,
	Interim Chief Executive Officer and Interim President
	/s/ Thomas C. Leonard	DATED: May 12, 2014
	Thomas C. Leonard,
	Chief Financial Officer

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EX-31.1A

EXHIBIT 31.1 (a)

CERTIFICATION PURSUANT TO RULE 13a–14(a)/15d-14(a) and

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Peter Sulick, certify that:

1. I have reviewed this Form 10-Q of Dynasil Corporation of America;

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(s) 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 15 d-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(s) 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: May 12, 2014	/s/ Peter Sulick
	Peter Sulick
	Interim Chief Executive Officer and Interim President

EX-31.1B

EXHIBIT 31.1 (b)

CERTIFICATION PURSUANT TO RULE 13a–14(a)/15d-14(a) and

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Thomas Leonard, certify that:

1. I have reviewed this Form 10-Q of Dynasil Corporation of America;

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(s) 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 15 d-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(s) 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: May 12, 2014	/s/ Thomas C. Leonard
	Thomas C. Leonard
	Chief Financial 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 DYNASIL CORPORATION OF AMERICA (the "Company") on Form 10Q for the period ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Peter Sulick, Interim Chief Executive Officer and President of the Company and Thomas C. Leonard, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(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 Sulick

Peter Sulick

Interim Chief Executive Officer and Interim President

/s/ Thomas C. Leonard

Thomas C. Leonard

Chief Financial Officer

May 12, 2014

EX-99.1

Contact:
Patty Kehe
Corporate Secretary
Dynasil Corporation of America
Phone: (617) 668-6855
pkehe@dynasil.com

Dynasil Corporation of America Reports
Second Quarter Fiscal 2014 Financial Results

Company Regains Bank Compliance and Records Second Quarter of Profitability

Watertown, MA, May 12, 2014 – Dynasil Corporation of America (NASDAQ: DYSL), a developer and manufacturer of optical detection and analysis technology and components for the homeland security, medical and industrial markets, today announced financial results for the fiscal 2014 second quarter ended March 31, 2014.

Dynasil reported net income attributable to common stockholders for the quarter of $272,000 or $0.02 per share, compared with a net loss of ($7,242,000), or ($0.49) per share, for the quarter ended March 31, 2013. Net income for the six months ended March 31, 2014 is $1,729,000, or $0.11 per share, as compared to a net loss of ($7,621,000), or ($0.52) per share, for the comparable period in 2013.

“I am pleased to report that Dynasil had a second consecutive quarter of profitability and, as previously reported, we recently closed on a new revolving line of credit with Middlesex Savings Bank and have regained compliance with the terms of our subordinated loan from Massachusetts Capital Resource Company,” said Dynasil Chairman and Interim CEO Peter Sulick. “Additionally, with the improved operational performance within our Optics Group and improvements in our Contract research profitability we have largely replaced the revenue lost as a result of the disposition of our Instruments segment.”

Net revenue for the second quarter of fiscal 2014 decreased slightly to $10.4 million, from $10.5 million in the second quarter of fiscal 2013. In this quarter, the Optics segment’s revenues increased approximately $900,000, or 21.8% over the same period in the prior year. This increase was offset by a $1.0 million decrease in revenues from the now divested Instruments segment which was sold during the first quarter of 2014.

Operating expenses for the three months ended March 31, 2014 were $3.9 million, a decrease of $8.1 million compared to the same period in 2013. This decrease brings our operating expenses more in line with our traditional experience, following a $6.8 million impairment charge in the quarter ended March 31, 2013 to write-down the goodwill and long-lived assets of the Company’s Instruments segment. Additionally, the now disposed lead paint detection and medical products businesses in the Instruments segment, incurred substantial development costs associated with product refreshes during the second quarter of 2013.

As a result, operating income for the quarter ended March 31, 2014, increased to approximately $500,000 from a loss of ($7.2) million in the quarter ended March 31, 2013.

On May 1, 2014, the Company entered into a three year revolving line of credit arrangement with Middlesex Savings Bank. Upon the closing of the loan, the Company repaid the approximately $1.8 million owed Santander Bank, N.A. and the $600,000 of accrued interest due Massachusetts Capital Resource Company, the subordinated lender. As a result, the Company is no longer in default of any of its loan obligations and has reclassified the subordinated debt to a long term liability based on its terms.

“Now that we have been successful in regaining compliance with our bank covenants, the Company can pursue growth opportunities in the optics market, as well as continuing to develop cutting-edge technologies within our Contract Research segment,” stated Mr. Sulick. “We are also happy to report that our joint venture with Mayo Clinic, Xcede Technologies, has raised an additional $250,000 from note holders to further fund it research efforts in tissue sealant technology.”

The Company has no conference calls scheduled at this time.

About Dynasil
Dynasil Corporation of America (NASDAQ: DYSL) develops and manufactures optical detection and analysis technology and components for the homeland security, medical and industrial markets. Combining world-class expertise in research and materials science with extensive experience in manufacturing and product development, Dynasil is commercializing products including dual-mode radiation detection solutions for Homeland Security and commercial applications and sensors for non-destructive testing.  Dynasil has an impressive and growing portfolio of issued and pending U.S. patents.  The Company is based in Watertown, Massachusetts, with additional operations in Mass., Minn., NY, NJ and the United Kingdom. More information about the Company is available at www.dynasil.com.

Forward-looking Statements

This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements regarding future events and our future results are based on current expectations, estimates, forecasts, and projections and the beliefs and assumptions of our management, including, without limitation, our expectations regarding results of operations, our compliance with the financial covenants under our loan agreements with Middlesex Savings Bank and Massachusetts Capital Resource Company, Xcede obtaining financing from outside investors, the commercialization of our products including our dual mode detectors, our development of new technologies including at Dynasil Biomedical, our ability to remediate the material weaknesses in our internal control over financial reporting, the adequacy of our current financing sources to fund our current operations, our growth initiatives, our capital expenditures and the strength of our intellectual property portfolio. These forward-looking statements may be identified by the use of words such as “plans,” “intends,” “may,” “could,” “expect,” “estimate,” “anticipate,” “continue” or similar terms, though not all forward-looking statements contain such words. The actual results of the future events described in such forward looking statements could differ materially from those stated in such forward looking statements due to a number of important factors. These factors that could cause actual results to differ from those anticipated or predicted include, without limitation, our ability to comply with the financial covenants under our outstanding indebtedness, our ability to develop and commercialize our products, including obtaining regulatory approvals, the size and growth of the potential markets for our products and our ability to serve those markets, the rate and degree of market acceptance of any of our products, our ability to address our material weaknesses in our internal controls, general economic conditions, costs and availability of raw materials and management information systems, our ability to obtain and maintain intellectual property protection for our products, competition, the loss of key management and technical personnel, our ability to obtain timely payment of our invoices to governmental customers, litigation, the effect of governmental regulatory developments, the availability of financing sources, our ability to identify and execute on acquisition opportunities and integrate such acquisitions into our business, and seasonality, as well as the uncertainties set forth in the Company’s Annual Report on Form 10 K, filed on December 20, 2013, including the risk factors contained in Item 1a, the Company’s Quarterly Report on Form 10-Q filed on February 12, 2014 and from time to time in the Company's other filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Dynasil Corporation of America and Subsidiaries

Consolidated Balance Sheet

ASSETS	March 31, 2014			September 30, 2013
Current Assets
Cash and cash equivalents	$	3,465,644		$	2,436,828
Accounts receivable, net		2,781,759			3,657,320
Costs in excess of billings and unbilled receivables		1,917,012			1,537,318
Inventories, net of reserves		2,979,550			3,140,244
Prepaid expenses and other current assets		1,387,620			1,291,942
Total current assets		12,531,585			12,063,652
Property, Plant and Equipment, net		4,670,360			4,773,779
Other Assets
Intangibles, net		1,321,561			3,484,583
Goodwill		6,272,228			6,240,983
Deferred financing costs, net		37,739			114,229
Total other assets		7,631,528			9,839,795
Total Assets	$	24,833,473		$	26,677,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	1,976,769		$	9,819,048
Capital lease obligations, current		128,979			124,383
Accounts payable		2,283,275			2,056,262
Deferred revenue		193,890			515,790
Accrued expenses and other liabilities		3,482,572			2,846,850
Total current liabilities		8,065,485			15,362,333
Long-term Liabilities
Long-term debt, net of current portion		3,127,795			-
Capital lease obligations, net of current portion		163,116			232,173
Convertible notes		383,084			-
Pension liability		249,966			249,966
Deferred tax liability		179,927			186,866
Total long-term liabilities		4,103,888			669,005
Stockholders' Equity
Dynasil stockholders' equity		12,694,587			10,645,888
Noncontrolling interest		(30,487	)		-
Total stockholders' equity		12,664,100			10,645,888
Total Liabilities and Stockholders' Equity	$	24,833,473		$	26,677,226

Dynasil Corporation of America and Subsidiaries

Consolidated Statement of Operations and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2014			2013			2014			2013
Net revenue	$	10,406,458		$	10,484,530		$	21,117,986		$	21,037,805
Cost of revenue		6,047,571			5,843,017			12,308,571			11,890,038
Gross profit		4,358,887			4,641,513			8,809,415			9,147,767
Operating expenses:
Sales and marketing		312,729			486,544			709,534			966,422
Research and development		378,379			573,229			724,577			1,210,358
General and administrative		3,200,552			4,066,682			6,480,546			7,647,216
Impairment of goodwill and long-lived assets		-			6,763,072			-			6,763,072
Total operating expenses		3,891,660			11,889,527			7,914,657			16,587,068
Gain on sale of assets		-			-			(1,186,686	)		-
Income (loss) from operations		467,227			(7,248,014	)		2,081,444			(7,439,301	)
Interest expense, net		209,330			177,159			422,107			363,916
Income (loss) before taxes		257,897			(7,425,173	)		1,659,337			(7,803,217	)
Income tax (credit) provision		4,602			(183,443	)		(39,441	)		(182,145	)
Net income (loss)		253,295			(7,241,730	)		1,698,778			(7,621,072	)
Less: Net loss attributable to noncontrolling interest		(18,300	)		-			(30,487	)		-
Net income (loss) attributable to common stockholders	$	271,595		$	(7,241,730	)	$	1,729,265		$	(7,621,072	)
Net income (loss)	$	253,295		$	(7,241,730	)	$	1,698,778		$	(7,621,072	)
Other comprehensive income (loss):
Foreign currency translation		36,845			(275,360	)		73,009			(245,621	)
Total comprehensive income (loss)	$	290,140		$	(7,517,090	)	$	1,771,787		$	(7,866,693	)
Basic net income (loss) per common share	$	0.02		$	(0.49	)	$	0.11		$	(0.52	)
Diluted net income (loss) per common share	$	0.02		$	(0.49	)	$	0.11		$	(0.52	)
Weighted average shares outstanding
Basic		15,102,023			14,770,943			15,061,890			14,721,733
Diluted		15,285,232			14,770,943			15,216,915			14,721,733

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Income Taxes (Details Textual)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Sep. 30, 2013
Income Tax [Line Items]
Effective Income Tax Rate Reconciliation, Percent, Total	1.80%	2.50%	(2.40%)	2.30%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			34.00%

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Stock Based Compensation (Details 1) (USD $)	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Nonvested, Beginning Balance	423,168	127,834
Shares, Granted	0	104,000
Shares, Vested	(50,000)	(53,000)
Shares, Cancelled	0	(20,000)
Shares, Nonvested, Ending Balance	373,168	158,834
Weighted-Average Grant-Date Fair Value, Nonvested, Beginning Balance	$ 0.74	$ 1.92
Weighted-Average Grant-Date Fair Value, Granted	$ 0	$ 1.03
Weighted-Average Grant-Date Fair Value, Vested	$ 1.05	$ 1.21
Weighted-Average Grant-Date Fair Value, Cancelled	$ 0	$ 4.02
Weighted-Average Grant-Date Fair Value, Nonvested, Ending Balance	$ 0.70	$ 1.31

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Formation of Xcede Technologies, Inc. Joint Venture (Details Textual) (USD $)	0 Months Ended
	Oct. 02, 2013	Mar. 31, 2014
Schedule of Equity Method Investments [Line Items]
Proceeds from Convertible Debt	$ 400,000
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Capital Stock Financing Discount Percentage	20.00%
Common Stock Valuation	5,000,000
Equity Method Investment, Ownership Percentage		90.00%
Common Stock, Conversion Features	at any time prior to a capital stock financing the note holders can convert at their option into common stock based on a $5 million valuation.
Additional Capital Raised		$ 250,000

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Segment, Customer and Geographical Reporting (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 10,406,458	$ 10,484,530	$ 21,117,986	$ 21,037,805
% of Total	100.00%	100.00%	100.00%	100.00%
United State [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	8,621,552	8,572,033	17,529,282	17,066,521
% of Total	83.00%	82.00%	83.00%	81.00%
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	844,963	847,662	1,674,400	1,736,003
% of Total	8.00%	8.00%	8.00%	8.00%
Other Credit Derivatives [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 939,943	$ 1,064,835	$ 1,914,304	$ 2,235,281
% of Total	9.00%	10.00%	9.00%	11.00%

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Formation of Xcede Technologies, Inc. Joint Venture

6 Months Ended

Mar. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 3 – Formation of Xcede Technologies, Inc. Joint Venture

On or about October 1, 2013, the Company formed Xcede Technologies, Inc. (“Xcede”), a joint venture with Mayo Clinic, in order to spin out and separately fund the development of its tissue sealant technology which formerly comprised the majority of its Biomedical segment. Xcede had received a total of approximately $400,000 in funding through March 31, 2014 in the form of Convertible Notes from outside investors including certain directors of the Company. The notes accrue interest at 5%. Upon the closing of a capital stock financing, the outstanding principal amount of the notes plus all accrued but unpaid interest on the notes will be converted into shares of the same capital stock sold in the capital stock financing at a 20% discount to the price per share of that capital stock financing. Alternatively, at any time prior to a capital stock financing the note holders can convert at their option into common stock based on a $5 million valuation. 

Xcede is continuing its fund raising efforts as it will require additional funding in connection with human trials expected to commence in the fourth quarter of 2014. Subsequent to March 31, 2014, Xcede has raised approximately $250,000 of additional funds.

Xcede’s common stock is 90% owned by Dynasil Biomedical and, as a result, is included in the Company’s consolidated balance sheet, results of operations and cash flows. Dynasil holds a majority of the seats on Xcede’s board of directors.

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Intangible Assets (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 43,667	$ 143,506	$ 88,555	$ 324,774

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Intangible Assets (Details 1) (USD $)	Mar. 31, 2014
Finite-Lived Intangible Assets [Line Items]
2014 (6 months)	$ 87,043
2015	174,085
2016	172,418
2017	114,085
2018	114,085
Thereafter	315,206
Total	976,922
Acquired Customer Base [Member]
Finite-Lived Intangible Assets [Line Items]
2014 (6 months)	39,976
2015	79,952
2016	79,952
2017	79,952
2018	79,952
Thereafter	153,154
Total	512,938
Know How [Member]
Finite-Lived Intangible Assets [Line Items]
2014 (6 months)	17,067
2015	34,133
2016	34,133
2017	34,133
2018	34,133
Thereafter	162,052
Total	315,651
Biomedical Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
2014 (6 months)	30,000
2015	60,000
2016	58,333
2017	0
2018	0
Thereafter	0
Total	$ 148,333

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Earnings (Loss) Per Common Share (Details)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Weighted average shares outstanding
Basic	15,102,023	14,770,943	15,061,890	14,721,733
Effect of dilutive securities
Dilutive Average Shares Outstanding	15,285,232	14,770,943	15,216,915	14,721,733
Stock Option [Member]
Effect of dilutive securities
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	0	0	0	0
Restricted Stock [Member]
Effect of dilutive securities
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	183,209	0	155,025	0

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Earnings (Loss) Per Common Share (Details Textual)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Earnings Loss Per Common Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	630,532	710,532	630,532	710,532

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Businesses Sold

6 Months Ended

Mar. 31, 2014

Businesses Sold [Abstract]

Businesses Sold [Text Block]

Note 2 – Businesses Sold

In the first quarter of 2014, the Company sold its lead paint detection and medical instruments businesses which comprised substantially all operating assets of its Instruments segment.

On November 7, 2013, the Company sold its Lead Paint detector business to Protec Instrument Corporation (“Protec”), a wholly owned subsidiary of Laboratoires Protec S.A., a French corporation and former European distributor of the Company’s lead paint detector products. The sales price totaled approximately $1.2 million, including the assumption of certain liabilities by Protec. The transaction also resulted in payment to the Company of approximately $500,000 in satisfaction of outstanding accounts receivable. Concurrently with the sale, the Company and Protec entered into a transition services agreement pursuant to which the Company will provide certain transitional services to Protec for up to five months after closing. The Company used $1.175 million of the proceeds from the sale to reduce its indebtedness to Santander Bank, N.A.

On December 23, 2013, the Company sold its Gamma Medical Probe business to Dilon Technologies, Inc., a Delaware corporation (“Dilon”), for $3.5 million, the assumption of certain liabilities of the Company, and a possible contingent payment. The Agreement also provided for $250,000 of the proceeds to be deposited in escrow for a year, which amount is included in accounts receivable in the Consolidated Balance Sheet. The Asset Purchase Agreement (“Agreement”) contains customary representations, warranties, covenants and indemnification provisions. Concurrently with the sale, the Company and Dilon entered into a transition services agreement pursuant to which the Company will provide certain transitional services to Dilon for up to five months after closing. The Company used $2.75 million of the proceeds from the sale to reduce its indebtedness to Santander Bank, N.A.

In connection with the sales of the businesses discussed above, the Company recorded a gain of $1.2 million which is included in Income from Operations in the three months ended December 31, 2013. The businesses sold constituted substantially all of Instruments segment but did not constitute a component of the business, and therefore did not qualify to be reported as discontinued operations. The assets held for sale at September 30, 2013 included fixed assets, inventory, and intangible customer assets totaling $2.9 million offset by customer deposits of approximately $100,000.

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Stock Based Compensation (Details) (USD $)	6 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Balance,Options Outstanding	630,532	710,532	794,483
Outstanding and exercisable,Options	630,532	710,532	794,483
Granted,Options Outstanding	0		0
Exercised,Options Outstanding	0		0
Cancelled, Options Outstanding	0		(83,951)
Balance,Options Outstanding	630,532	630,532	710,532	794,483
Outstanding and exercisable,Options	630,532	630,532	710,532	794,483
Balance,Weighted Average Exercise Price per Share	$ 3.33	$ 3.30	$ 3.34
Outstanding and exercisable,Weighted Average Exercise Price per Share	$ 3.33	$ 3.30	$ 3.34
Granted,Weighted Average Exercise Price per Share	$ 0		$ 0
Exercised,Weighted Average Exercise Price per Share	$ 0		$ 0
Cancelled,Weighted Average Exercise Price per Share	$ 0		$ 3.69
Balance,Weighted Average Exercise Price per Share	$ 3.33	$ 3.33	$ 3.30	$ 3.34
Outstanding and exercisable,Weighted Average Exercise Price per Share	$ 3.33	$ 3.33	$ 3.30	$ 3.34
Balance,Weighted Average Remain Contractual Term (In Years)	6 months 22 days	1 year 22 days	1 year 4 months 28 days	1 year 9 months
Outstanding and exercisable options,Weighted Average Remain Contractual Term (In Years)	6 months 22 days	1 year 22 days	1 year 4 months 28 days	1 year 9 months

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Subsequent Events (Details Textual) (Subsequent Event [Member], USD $)		1 Months Ended
	Mar. 31, 2014	Apr. 30, 2014 MiddleSex Savings Bank [Member]	May 01, 2014 MiddleSex Savings Bank [Member]	May 01, 2014 Massachusetts Capital Resource [Member]
Subsequent Event [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 4,000,000
Line of Credit Facility, Periodic Payment		1,800,000
Line of Credit Facility, Increase, Accrued Interest		600,000
Line of Credit Facility, Amount Outstanding			$ 2,400,000	$ 3,000,000
Debt Instrument, Interest Rate, Effective Percentage	3.25%

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2014	Sep. 30, 2013
Current Assets
Cash and cash equivalents	$ 3,465,644	$ 2,436,828
Accounts receivable, net of allowances of $318,792 and $184,775 at March 31, 2014 and September 30, 2013, respectively	2,781,759	3,657,320
Costs in excess of billings and unbilled receivables	1,917,012	1,537,318
Inventories, net of reserves	2,979,550	3,140,244
Prepaid expenses and other current assets	1,387,620	1,291,942
Total current assets	12,531,585	12,063,652
Property, Plant and Equipment, net	4,670,360	4,773,779
Other Assets
Intangibles, net	1,321,561	3,484,583
Goodwill	6,272,228	6,240,983
Deferred financing costs, net	37,739	114,229
Total other assets	7,631,528	9,839,795
Total Assets	24,833,473	26,677,226
Current Liabilities
Current portion of long-term debt	1,976,769	9,819,048
Capital lease obligations, current	128,979	124,383
Accounts payable	2,283,275	2,056,262
Deferred revenue	193,890	515,790
Accrued expenses and other liabilities	3,482,572	2,846,850
Total current liabilities	8,065,485	15,362,333
Long-term Liabilities
Long-term debt, net of current portion	3,127,795	0
Capital lease obligations, net of current portion	163,116	232,173
Convertible notes	383,084	0
Pension liability	249,966	249,966
Deferred tax liability	179,927	186,866
Total long-term liabilities	4,103,888	669,005
Stockholders' Equity
Common Stock, $0.0005 par value, 40,000,000 shares authorized, 16,318,753 and 16,224,402 shares issued, 15,508,593 and 15,414,242 shares outstanding at March 31, 2014 and September 30, 2013, respectively.	8,159	8,112
Additional paid in capital	17,722,381	17,476,003
Accumulated other comprehensive income	225,694	152,685
Accumulated deficit	(4,275,305)	(6,004,570)
Less 810,160 shares of treasury stock - at cost	(986,342)	(986,342)
Total Dynasil stockholders' equity	12,694,587	10,645,888
Noncontrolling interest	(30,487)	0
Total stockholders' equity	12,664,100	10,645,888
Total Liabilities and Stockholders' Equity	$ 24,833,473	$ 26,677,226

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income (loss)	$ 1,698,778	$ (7,621,072)
Adjustments to reconcile net income (loss) to net cash:
Stock compensation expense	239,225	210,128
Foreign exchange loss	14,029	(31,275)
Gain on sale of assets	(1,186,686)	(87,803)
Depreciation and amortization	534,773	870,175
Other	73,320	(148,955)
Impairment of goodwill and long-lived assets	0	6,763,072
Other changes in assets and libilities:
Accounts receivable, net	447,291	1,102,777
Inventories	(531,817)	(359,106)
Costs in excess of billings and unbilled receivables	(379,694)	(19,387)
Prepaid expenses and other assets	(99,005)	(84,600)
Accounts payable	230,348	112,126
Accrued expenses and other liabilities	883,309	(963,447)
Deferred revenue	(319,565)	38,178
Net cash provided by (used in) operating activities	1,604,306	(219,189)
Cash flows from investing activities:
Proceeds from sale of assets	4,357,219	80,252
Purchases of property, plant and equipment	(539,476)	(215,679)
Net cash provided by (used in) investing activities	3,817,743	(135,427)
Cash flows from financing activities:
Proceeds from issuance of common stock	7,200	11,688
Net proceeds from issuance of convertible notes	383,084	0
Principal payments on capital leases	(64,461)	(21,056)
Proceeds from long-term debt	141,348	0
Payments on long-term debt	(4,855,832)	(936,873)
Net cash used in financing activities	(4,388,661)	(946,241)
Effect of exchange rates on cash and cash equivalents	(4,572)	18,878
Net increase (decrease) in cash and cash equivalents	1,028,816	(1,281,979)
Cash and cash equivalents, beginning	2,436,828	3,414,880
Cash and cash equivalents, ending	3,465,644	2,132,901
Non cash activities:
Assets purchased under capital leases	$ 0	$ 386,680

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Stock Based Compensation (Details Textual) (USD $)	Mar. 31, 2014
Stock Based Compensation [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 103,000

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Segment, Customer and Geographical Reporting (Tables)

6 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

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

The Company’s segment information for the three months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Three Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	5,614,060	$	4,788,669	$	-	$	3,729	$	10,406,458
Gross Profit		2,441,719		1,919,261		(5,822)		3,729		4,358,887
Impairment of goodwill		-		-		-		-		-
Operating Income (Loss)		241,938		522,112		(75,585)		(221,238)		467,227
Depreciation and Amortization		69,949		183,499		-		15,000		268,448
Capital expenditures		12,028		396,530		-		-		408,558
Intangibles, Net		315,651		857,579		-		148,331		1,321,561
Goodwill		4,938,625		1,333,603		-		-		6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338	$	24,833,473

Results of Operations for the Three Months Ended March 31,
2013
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	5,487,850	$	3,931,766	$	1,014,320	$	50,594	$	10,484,530
Gross Profit		2,647,870		1,481,948		461,101		50,594		4,641,513
Impairment of goodwill		-		-		6,763,072		-		6,763,072
Operating Income (Loss)		232,015		2,336		(7,270,801)		(211,564)		(7,248,014)
Depreciation and Amortization		79,637		184,696		164,384		15,000		443,717
Capital expenditures		(187,425)		87,536		-		-		(99,889)
Intangibles, Net		349,786		866,488		2,349,767		209,997		3,776,038
Goodwill		4,938,625		1,197,017		-		-		6,135,642
Total Assets	$	13,332,151	$	9,748,703	$	4,862,956	$	334,658	$	28,278,468

The Company’s segment information for the six months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Six Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	11,454,502	$	8,887,177	$	772,578	$	3,729	$	21,117,986
Gross Profit		4,971,257		3,516,521		317,908		3,729		8,809,415
Impairment of goodwill		-		-		-		-		-
Operating Income (Loss)		590,332		920,544		966,178		(395,610)		2,081,444
Depreciation and Amortization		139,496		361,607		2,003		31,667		534,773
Capital expenditures		12,028		527,448		-		-		539,476
Intangibles, Net		315,651		857,579		-		148,331		1,321,561
Goodwill		4,938,625		1,333,603		-		-		6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338	$	24,833,473

Results of Operations for the Six Months Ended March 31,
2013
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	10,398,690	$	8,183,706	$	2,298,358	$	157,051	$	21,037,805
Gross Profit		4,861,923		3,061,891		1,066,902		157,051		9,147,767
Impairment of goodwill		-		-		6,763,072		-		6,763,072
Operating Income (Loss)		231,409		388,012		(7,726,495)		(332,227)		(7,439,301)
Depreciation and Amortization		142,419		370,324		327,432		30,000		870,175
Capital expenditures		(1,095)		209,682		7,092		-		215,679
Intangibles, Net		349,786		866,488		2,349,767		209,997		3,776,038
Goodwill		4,938,625		1,197,017		-		-		6,135,642
Total Assets	$	13,332,151	$	9,748,703	$	4,862,956	$	334,658	$	28,278,468

Schedule Of Segment Revenue By Geographical Location [Table Text Block]

Revenue by geographic location in total and as a percentage of total revenue, for the three months ended March 31, 2014 and 2013 are as follows:

	Three Months Ended					Three Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,621,552		83	%	$	8,572,033		82	%
Europe		844,963		8	%		847,662		8	%
Other		939,943		9	%		1,064,835		10	%
	$	10,406,458		100	%	$	10,484,530		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the six months ended March 31, 2014 and 2013 are as follows:

	Six Months Ended					Six Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	17,529,282		83	%	$	17,066,521		81	%
Europe		1,674,400		8	%		1,736,003		8	%
Other		1,914,304		9	%		2,235,281		11	%
	$	21,117,986		100	%	$	21,037,805		100	%

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Segment, Customer and Geographical Reporting (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Sep. 30, 2013
Segment Reporting Information [Line Items]
Revenue	$ 10,406,458	$ 10,484,530	$ 21,117,986	$ 21,037,805
Gross Profit	4,358,887	4,641,513	8,809,415	9,147,767
Impairment of goodwill	0	6,763,072	0	6,763,072
Operating Income (Loss)	467,227	(7,248,014)	2,081,444	(7,439,301)
Depreciation and Amortization	268,448	443,717	534,773	870,175
Capital expenditures	408,558	(99,889)	539,476	215,679
Intangibles, Net	1,321,561	3,776,038	1,321,561	3,776,038	3,484,583
Goodwill	6,272,228	6,135,642	6,272,228	6,135,642	6,240,983
Total Assets	24,833,473	28,278,468	24,833,473	28,278,468	26,677,226
Contract Research [Member]
Segment Reporting Information [Line Items]
Revenue	5,614,060	5,487,850	11,454,502	10,398,690
Gross Profit	2,441,719	2,647,870	4,971,257	4,861,923
Impairment of goodwill	0	0	0	0
Operating Income (Loss)	241,938	232,015	590,332	231,409
Depreciation and Amortization	69,949	79,637	139,496	142,419
Capital expenditures	12,028	(187,425)	12,028	(1,095)
Intangibles, Net	315,651	349,786	315,651	349,786
Goodwill	4,938,625	4,938,625	4,938,625	4,938,625
Total Assets	10,230,207	13,332,151	10,230,207	13,332,151
Optics [Member]
Segment Reporting Information [Line Items]
Revenue	4,788,669	3,931,766	8,887,177	8,183,706
Gross Profit	1,919,261	1,481,948	3,516,521	3,061,891
Impairment of goodwill	0	0	0	0
Operating Income (Loss)	522,112	2,336	920,544	388,012
Depreciation and Amortization	183,499	184,696	361,607	370,324
Capital expenditures	396,530	87,536	527,448	209,682
Intangibles, Net	857,579	866,488	857,579	866,488
Goodwill	1,333,603	1,197,017	1,333,603	1,197,017
Total Assets	13,815,832	9,748,703	13,815,832	9,748,703
Instruments [Member]
Segment Reporting Information [Line Items]
Revenue	0	1,014,320	772,578	2,298,358
Gross Profit	(5,822)	461,101	317,908	1,066,902
Impairment of goodwill	0	6,763,072	0	6,763,072
Operating Income (Loss)	(75,585)	(7,270,801)	966,178	(7,726,495)
Depreciation and Amortization	0	164,384	2,003	327,432
Capital expenditures	0	0	0	7,092
Intangibles, Net	0	2,349,767	0	2,349,767
Goodwill	0	0	0	0
Total Assets	455,096	4,862,956	455,096	4,862,956
Biomedical [Member]
Segment Reporting Information [Line Items]
Revenue	3,729	50,594	3,729	157,051
Gross Profit	3,729	50,594	3,729	157,051
Impairment of goodwill	0	0	0	0
Operating Income (Loss)	(221,238)	(211,564)	(395,610)	(332,227)
Depreciation and Amortization	15,000	15,000	31,667	30,000
Capital expenditures	0	0	0	0
Intangibles, Net	148,331	209,997	148,331	209,997
Goodwill	0	0	0	0
Total Assets	$ 332,338	$ 334,658	$ 332,338	$ 334,658

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Businesses Sold (Details Textual) (USD $)	3 Months Ended		1 Months Ended	0 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Dec. 23, 2013 Gamma Medical Probe [Member]	Nov. 07, 2013 Lead Paint detector [Member]
Businesses Sold [Line Items]
Proceeds from Divestiture of Businesses			$ 3,500,000	$ 1,200,000
Proceeds from Customers				500,000
Repayments of Bank Debt			2,750,000	1,175,000
Escrow Deposit			250,000
Gain (Loss) on Disposition of Business	1,200,000
Assets Held-for-sale, at Carrying Value, Total		2,900,000
Customer Deposits, Noncurrent		$ 100,000

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Basis of Presentation and Ability to Continue as a Going Concern

6 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations [Text Block]

Note 1 - Basis of Presentation and Ability to Continue as a Going Concern

The accompanying consolidated balance sheet as of March 31, 2014, the consolidated statements of operations and comprehensive income (loss) for the three months and six months ended March 31, 2014 and 2013, changes in stockholders’ equity for the six months ended March 31, 2014 and cash flows for the six months ended March 31, 2014 and 2013 of Dynasil Corporation of America and subsidiaries (the “Company”), and the related information contained in these notes have been prepared by management and are unaudited. In the opinion of management, all adjustments (which include normal recurring and nonrecurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles for the periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year.

The preparation of unaudited consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2013 Annual Report on Form 10-K previously filed by the Company with the Securities and Exchange Commission.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company incurred substantial losses from operations for the fiscal years ended September 30, 2013 and 2012 and failed to comply with the financial covenants set forth in the terms of its outstanding loan agreements for the fiscal year ended September 30, 2012 and each of the quarters during the fiscal year ended September 30, 2013. These covenants required the Company to maintain specified ratios of earnings before interest, taxes, depreciation and amortization (EBITDA) to fixed charges and to total/senior debt.

The Company returned to profitability for the three month period ended December 31, 2013 and regained compliance with the financial covenants described above. However Santander Bank, N.A. (“Santander”), the Company’s senior lender, continued to require that it not pay interest due monthly to our subordinated lender, Massachusetts Capital Resource Company, constituting a separate event of default. In addition, Santander advised the Company that it was unwilling to negotiate regarding waivers for our past quarterly covenant violations after we reported that it had regained compliance for the three months ended December 31, 2013.

On May 1, 2014, the Company entered into a three year revolving line of credit arrangement with a new bank for up to $4 million with the amount available for advances determined monthly based on eligible billed and unbilled accounts receivable and inventory. The line of credit is secured by substantially all the Company’s assets. Upon the closing of the loan, the Company repaid the approximately $1.8 million owed the senior lender and the $600,000 of accrued interest due the subordinated lender through April 30, 2014. The subordinated lender also issued a waiver to the Company for prior covenant violations.

As a result, the Company is no longer in default of any of its loan obligations and has reclassified the subordinated debt to a long term liability based on its terms.

The Company considers events or transactions that have occurred after the unaudited consolidated balance sheet date of March 31, 2014, but prior to the filing of the unaudited consolidated financial statements with the SEC on this Form 10-Q, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure, as applicable. Subsequent events have been evaluated through the date of the filing of this Quarterly Report on Form 10-Q with the SEC.

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Mar. 31, 2014	Sep. 30, 2013
Allowance for doubtful accounts (in dollars)	$ 318,792	$ 184,775
Common stock, par value (in dollars per share)	$ 0.0005	$ 0.0005
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	16,318,753	16,224,402
Common stock, shares outstanding	15,508,593	15,414,242
Treasury stock, shares	810,160	810,160

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Subsequent Events

6 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 11 – Subsequent Events

The Company has evaluated subsequent events through the date that the financial statements were released.

On May 1, 2014, the Company entered into an agreement with Middlesex Savings Bank to establish a revolving line of credit of up to $4 million, subject to availability restrictions described below. Upon the closing of the loan, the Company repaid in full the approximately $1.8 million owed Santander Bank and the $600,000 of accrued interest due, as of April 30, 2014, to Massachusetts Capital Resource Company, its subordinated lender. As a result, as of May 1, 2014, the Company has total indebtedness outstanding consisting of $2.4 million newly drawn senior debt owed to Middlesex Savings Bank and approximately $3.0 million of existing subordinated debt owed to Massachusetts Capital Resource Company due July 2017.

The Bank Loan Agreement provides that the revolving line of credit expires May 2017 and is secured by substantially all the Company's assets. Borrowing availability under the revolving line of credit is determined monthly based on eligible billed and unbilled accounts receivable and inventory. The Company is required to maintain compliance with a debt to service coverage ratio. The interest rate on the loan is equal to the Prime Rate, but in no event less than 3.25%.

XML

Document And Entity Information	6 Months Ended
	Mar. 31, 2014	May 05, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	DYSL
Entity Common Stock, Shares Outstanding		15,543,268
Entity Registrant Name	DYNASIL CORP OF AMERICA
Entity Central Index Key	0000030831
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company

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Inventories (Tables)

6 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories, net of reserves, consists of the following:

	March 31,		September 30,
	2014		2013
Raw Materials	$	1,741,628	$	2,132,962
Work-in-Process		975,194		703,873
Finished Goods		262,728		303,409
	$	2,979,550	$	3,140,244

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Net revenue	$ 10,406,458	$ 10,484,530	$ 21,117,986	$ 21,037,805
Cost of revenue	6,047,571	5,843,017	12,308,571	11,890,038
Gross profit	4,358,887	4,641,513	8,809,415	9,147,767
Operating expenses:
Sales and marketing	312,729	486,544	709,534	966,422
Research and development	378,379	573,229	724,577	1,210,358
General and administrative	3,200,552	4,066,682	6,480,546	7,647,216
Impairment of goodwill and long-lived assets	0	6,763,072	0	6,763,072
Total operating expenses	3,891,660	11,889,527	7,914,657	16,587,068
Gain on sale of assets	0	0	(1,186,686)	0
Income (loss) from operations	467,227	(7,248,014)	2,081,444	(7,439,301)
Interest expense, net	209,330	177,159	422,107	363,916
Income (loss) before taxes	257,897	(7,425,173)	1,659,337	(7,803,217)
Income tax (credit) provision	4,602	(183,443)	(39,441)	(182,145)
Net income (loss)	253,295	(7,241,730)	1,698,778	(7,621,072)
Less: Net loss attributable to noncontrolling interest	(18,300)	0	(30,487)	0
Net income (loss) attributable to common stockholders	271,595	(7,241,730)	1,729,265	(7,621,072)
Net income (loss)	253,295	(7,241,730)	1,698,778	(7,621,072)
Other comprehensive income (loss):
Foreign currency translation	36,845	(275,360)	73,009	(245,621)
Total comprehensive income (loss)	$ 290,140	$ (7,517,090)	$ 1,771,787	$ (7,866,693)
Basic net income (loss) per common share (in dollars per share)	$ 0.02	$ (0.49)	$ 0.11	$ (0.52)
Diluted net income (loss) per common share (in dollars per share)	$ 0.02	$ (0.49)	$ 0.11	$ (0.52)
Weighted average shares outstanding
Basic (in shares)	15,102,023	14,770,943	15,061,890	14,721,733
Diluted (in shares)	15,285,232	14,770,943	15,216,915	14,721,733

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Goodwill

6 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill Disclosure [Text Block]

Note 6 – Goodwill

Goodwill is subject to an annual impairment test. The Company considers many factors which may indicate the requirement to perform additional, interim impairment tests. These include:

· A significant adverse long term outlook for any of its industries;

· An adverse finding or rejection from a regulatory body involved in new product regulatory approvals;

· Failure of an anticipated commercialization of a product or product line;

· Unanticipated competition or the introduction of a disruptive technology;

· The testing for recoverability under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 of a significant asset group within a reporting unit;

· A loss of key personnel; and

· An expectation that a reporting unit carrying goodwill, or a significant portion of a reporting unit, will be sold or otherwise disposed of.

There were no changes, aside from foreign exchange rate fluctuations, in the carrying value of goodwill during the three and six months ended March 31, 2014.

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Intangible Assets

6 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

Note 5 – Intangible Assets

Intangible assets at March 31, 2014 and September 30, 2013 consist of the following:

	Useful		Gross		Accumulated
March 31, 2014	Life (years)		Amount		Amortization		Net
Acquired Customer Base		5 to 15	$	888,318	$	375,380	$	512,938
Know How		15		512,000		196,349		315,651
Trade Names		Indefinite		344,639		-		344,639
Biomedical Technologies		5		260,000		111,667		148,333
			$	2,004,957	$	683,396	$	1,321,561

	Useful		Gross		Accumulated
September 30, 2013	Life (years)		Amount		Amortization		Net
Acquired Customer Base		5 to 15	$	5,145,638	$	2,645,715	$	2,499,923
Know How		15		512,000		179,283		332,717
Trade Names		15 or Indefinite		547,802		75,856		471,946
Biomedical Technologies		5		300,000		120,003		179,997
			$	6,505,440	$	3,020,857	$	3,484,583

Amortization expense for the three months ended March 31, 2014 and 2013 was $43,667 and $143,506, respectively. Amortization expense for the six months ended March 31, 2014 and 2013 was $88,555 and $324,774, respectively. Estimated amortization expense for each of the next five fiscal years is as follows:

	2014 (6 months)		2015		2016		2017		2018		Thereafter		Total
Acquired Customer Base	$	39,976	$	79,952	$	79,952	$	79,952	$	79,952	$	153,154	$	512,938
Know How		17,067		34,133		34,133		34,133		34,133		162,052		315,651
Biomedical Technologies		30,000		60,000		58,333		-		-		-		148,333
	$	87,043	$	174,085	$	172,418	$	114,085	$	114,085	$	315,206	$	976,922

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Basis of Presentation and Ability to Continue as a Going Concern (Details Textual) (Subsequent Event [Member], New Bank [Member], USD $)	1 Months Ended
	Apr. 30, 2014	May 01, 2014
Subsequent Event [Member] | New Bank [Member]
Basis Of Presentation [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 4,000,000
Line of Credit Facility, Periodic Payment	1,800,000
Line of Credit Facility, Increase, Accrued Interest	$ 600,000

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Intangible Assets (Tables)

6 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

Intangible assets at March 31, 2014 and September 30, 2013 consist of the following:

	Useful		Gross		Accumulated
March 31, 2014	Life (years)		Amount		Amortization		Net
Acquired Customer Base		5 to 15	$	888,318	$	375,380	$	512,938
Know How		15		512,000		196,349		315,651
Trade Names		Indefinite		344,639		-		344,639
Biomedical Technologies		5		260,000		111,667		148,333
			$	2,004,957	$	683,396	$	1,321,561

	Useful		Gross		Accumulated
September 30, 2013	Life (years)		Amount		Amortization		Net
Acquired Customer Base		5 to 15	$	5,145,638	$	2,645,715	$	2,499,923
Know How		15		512,000		179,283		332,717
Trade Names		15 or Indefinite		547,802		75,856		471,946
Biomedical Technologies		5		300,000		120,003		179,997
			$	6,505,440	$	3,020,857	$	3,484,583

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Amortization expense for the three months ended March 31, 2014 and 2013 was $43,667 and $143,506, respectively. Amortization expense for the six months ended March 31, 2014 and 2013 was $88,555 and $324,774, respectively. Estimated amortization expense for each of the next five fiscal years is as follows:

	2014 (6 months)		2015		2016		2017		2018		Thereafter		Total
Acquired Customer Base	$	39,976	$	79,952	$	79,952	$	79,952	$	79,952	$	153,154	$	512,938
Know How		17,067		34,133		34,133		34,133		34,133		162,052		315,651
Biomedical Technologies		30,000		60,000		58,333		-		-		-		148,333
	$	87,043	$	174,085	$	172,418	$	114,085	$	114,085	$	315,206	$	976,922

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Segment, Customer and Geographical Reporting

6 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 9 – Segment, Customer and Geographical Reporting

Segment Financial Information

Dynasil’s business is comprised of four segments: contract research (“Contract Research”), optics (“Optics”), instruments (“Instruments”) and biomedical (“Biomedical”). Within these segments, there is a segregation of reportable units based upon the organizational structure used to evaluate performance and make decisions on resource allocation, as well as availability and materiality of separate financial results consistent with that structure. The Contract Research segment is one of the largest small business participants in U.S. government-funded research. The Optics segment manufactures optical materials, components and coatings. The Instruments segment manufactures specialized instruments used in various applications in the medical, industrial, and homeland security/defense sectors. The Biomedical segment, through Xcede Technologies, Inc., a majority owned, joint venture (“Xcede”), is focused on developing a tissue sealant technology for a wide spectrum of applications though no assurance can be given that this technology will become successfully commercialized.

As discussed in Note 2, substantially all the operating assets of the Instruments segment were sold in the three months ended December 31, 2013.

The Company’s segment information for the three months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Three Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	5,614,060	$	4,788,669	$	-	$	3,729	$	10,406,458
Gross Profit		2,441,719		1,919,261		(5,822)		3,729		4,358,887
Impairment of goodwill		-		-		-		-		-
Operating Income (Loss)		241,938		522,112		(75,585)		(221,238)		467,227
Depreciation and Amortization		69,949		183,499		-		15,000		268,448
Capital expenditures		12,028		396,530		-		-		408,558
Intangibles, Net		315,651		857,579		-		148,331		1,321,561
Goodwill		4,938,625		1,333,603		-		-		6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338	$	24,833,473

Results of Operations for the Three Months Ended March 31,
2013
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	5,487,850	$	3,931,766	$	1,014,320	$	50,594	$	10,484,530
Gross Profit		2,647,870		1,481,948		461,101		50,594		4,641,513
Impairment of goodwill		-		-		6,763,072		-		6,763,072
Operating Income (Loss)		232,015		2,336		(7,270,801)		(211,564)		(7,248,014)
Depreciation and Amortization		79,637		184,696		164,384		15,000		443,717
Capital expenditures		(187,425)		87,536		-		-		(99,889)
Intangibles, Net		349,786		866,488		2,349,767		209,997		3,776,038
Goodwill		4,938,625		1,197,017		-		-		6,135,642
Total Assets	$	13,332,151	$	9,748,703	$	4,862,956	$	334,658	$	28,278,468

The Company’s segment information for the six months ended March 31, 2014 and 2013 is summarized below:

Results of Operations for the Six Months Ended March 31,
2014
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	11,454,502	$	8,887,177	$	772,578	$	3,729	$	21,117,986
Gross Profit		4,971,257		3,516,521		317,908		3,729		8,809,415
Impairment of goodwill		-		-		-		-		-
Operating Income (Loss)		590,332		920,544		966,178		(395,610)		2,081,444
Depreciation and Amortization		139,496		361,607		2,003		31,667		534,773
Capital expenditures		12,028		527,448		-		-		539,476
Intangibles, Net		315,651		857,579		-		148,331		1,321,561
Goodwill		4,938,625		1,333,603		-		-		6,272,228
Total Assets	$	10,230,207	$	13,815,832	$	455,096	$	332,338	$	24,833,473

Results of Operations for the Six Months Ended March 31,
2013
	Contract Research		Optics		Instruments		Biomedical		Total
Revenue	$	10,398,690	$	8,183,706	$	2,298,358	$	157,051	$	21,037,805
Gross Profit		4,861,923		3,061,891		1,066,902		157,051		9,147,767
Impairment of goodwill		-		-		6,763,072		-		6,763,072
Operating Income (Loss)		231,409		388,012		(7,726,495)		(332,227)		(7,439,301)
Depreciation and Amortization		142,419		370,324		327,432		30,000		870,175
Capital expenditures		(1,095)		209,682		7,092		-		215,679
Intangibles, Net		349,786		866,488		2,349,767		209,997		3,776,038
Goodwill		4,938,625		1,197,017		-		-		6,135,642
Total Assets	$	13,332,151	$	9,748,703	$	4,862,956	$	334,658	$	28,278,468

Customer Financial Information

For the three and six months ended March 31, 2014 and 2013, the top three customers for the Contract Research segment were various agencies of the U.S. Government. For the three months ended March 31, 2014 and 2013, these customers made up 69% and 64%, respectively, of Contract Research revenue. For the six months ended March 31, 2014 and 2013, these customers made up 67% and 63%, respectively, of Contract Research revenue.

For the three and six months ended March 31, 2014 and 2013, there was no customer in the Optics segment whose revenue represented more than 10% of the total segment revenue.

For the three months ended March 31, 2014, there was no revenue in the Instruments segment. For the three months ended March 31, 2013, the top three customers for the Instruments segment made up 30% of Instruments revenue. For the six months ended March 31, 2014 and 2013, the top three customers for the Instruments segment made up 24% and 32%, respectively, of Instruments revenue.

For the both three and six months ended March 31, 2014 and 2013, the Biomedical segment had one customer whose revenue represented 100% of the total segment revenue.

Geographic Financial Information

Revenue by geographic location in total and as a percentage of total revenue, for the three months ended March 31, 2014 and 2013 are as follows:

	Three Months Ended					Three Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,621,552		83	%	$	8,572,033		82	%
Europe		844,963		8	%		847,662		8	%
Other		939,943		9	%		1,064,835		10	%
	$	10,406,458		100	%	$	10,484,530		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the six months ended March 31, 2014 and 2013 are as follows:

	Six Months Ended					Six Months Ended
	March 31, 2014					March 31, 2013
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	17,529,282		83	%	$	17,066,521		81	%
Europe		1,674,400		8	%		1,736,003		8	%
Other		1,914,304		9	%		2,235,281		11	%
	$	21,117,986		100	%	$	21,037,805		100	%

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Earnings (Loss) Per Common Share

6 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Note 7 – Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing the net income applicable or loss attributable to common shares by the weighted average number of common shares. Diluted earnings per common share adjusts basic earnings per share for the effects of common stock options, common stock warrants, convertible preferred stock and other potential dilutive common shares outstanding during the periods.

For purposes of computing diluted earnings per share for the three and six months ended March 31, 2014 and 2013, no common stock options were included in the calculation of dilutive shares as all of the 630,532 and 710,532 common stock options outstanding, respectively, had exercise prices above the current quarterly average market price per share and their inclusion is anti-dilutive. Additionally, for the three and six months ended March 31, 2013, no common share equivalents related to stock options or unvested restricted stock were included in the calculation of dilutive shares, since there was a loss from continuing operations and the inclusion of common share equivalents would have been anti-dilutive.

The computation of the weighted shares outstanding for the three months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,102,023		14,770,943
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		183,209		-
Dilutive Average Shares Outstanding		15,285,232		14,770,943

The computation of the weighted shares outstanding for the six months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,061,890		14,721,733
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		155,025		-
Dilutive Average Shares Outstanding		15,216,915		14,721,733

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Stock Based Compensation

6 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 8 - Stock Based Compensation

The fair value of the stock options granted is estimated at the date of grant using the Black-Scholes option pricing model.

A summary of stock option activity for the six months ended March 31, 2014 and 2013 is presented below:

	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2013		630,532	$	3.33		1.06
Outstanding and exercisable at September 30, 2013		630,532	$	3.33		1.06
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance at March 31, 2014		630,532	$	3.33		0.56
Outstanding and exercisable at March 31, 2014		630,532	$	3.33		0.56

	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2012		794,483	$	3.34		1.75
Outstanding and exercisable at September 30, 2012		794,483	$	3.34		1.75
Granted		-		-
Exercised		-		-
Cancelled		(83,951)	$	3.69
Balance at March 31, 2013		710,532	$	3.30		1.41
Outstanding and exercisable at March 31, 2013		710,532	$	3.30		1.41

A summary of restricted stock activity for the six months ended March 31, 2014 and 2013 is presented below:

Restricted Stock Activity for the Six Months ended March 31, 2014	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2013		423,168	$	0.74
Granted		-	$	-
Vested		(50,000)	$	1.05
Cancelled		-	$	-
Nonvested at March 31, 2014		373,168	$	0.70

Restricted Stock Activity for the Six Months ended March 31, 2013	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2012		127,834	$	1.92
Granted		104,000	$	1.03
Vested		(53,000)	$	1.21
Cancelled		(20,000)	$	4.02
Nonvested at March 31, 2013		158,834	$	1.31

Stock Compensation Expense for the six months ended March 31, 2014 and 2013 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	50,627	$	80,091
Restricted Stock Grants		68,351		53,076
Option Grants		-		2,454
Employee Stock Purchase Plan		601		991
Total	$	119,579	$	136,612

	Six Months Ended		Six Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	101,253	$	132,552
Restricted Stock Grants		136,702		65,694
Option Grants		-		9,813
Employee Stock Purchase Plan		1,270		2,069
Total	$	239,225	$	210,128

At March 31, 2014 there was approximately $103,000 in unrecognized stock compensation cost, which is expected to be recognized over a weighted average period of approximately five months.

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Income Taxes

6 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 10 - Income Taxes

Dynasil Corporation of America and its wholly-owned U.S. subsidiaries file a consolidated federal income tax return and various state returns. The Company’s U.K. subsidiary files tax returns in the U.K.

The Company uses the asset and liability approach to account for income taxes. Under this approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit carry forwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates, and tax laws, in the respective tax jurisdiction then in effect.

In assessing the ability to realize the net deferred tax assets, management considers various factors including taxable income in carryback years, future reversals of existing taxable temporary differences, tax planning strategies and projections of future taxable income, to determine whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Based upon the Company’s recent losses and uncertainty of future profits, the Company has determined that the uncertainty regarding the realization of these assets is sufficient to warrant the need for a full valuation allowance against its U.S. net deferred tax assets.

The Company applies the authoritative provisions related to accounting for uncertainty in income taxes. As required by these provisions, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being reached upon ultimate settlement with the relevant tax authority. As of March 31, 2014 and September 30, 2013, the Company has no unrecorded liabilities for uncertain tax positions. Interest and penalty charges, if any, related to uncertain tax positions would be classified as income tax expense in the accompanying consolidated statement of operations. As of March 31, 2014 and September 30, 2013, the Company had no accrued interest or penalties related to uncertain tax positions. The Company currently has no federal or state tax examinations in progress.

The effective tax rates were 1.8% and (2.4%) for the three and six months ended March 31, 2014, respectively, and 2.5% and 2.3% for the three and six months ended March 31, 2013, respectively. The rates differ from the U.S. federal statutory income tax rate of 34% primarily due to a full valuation allowance against the Company’s U.S. deferred tax asset.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company’s tax filings for federal and state jurisdictions for the tax years beginning with 2010 are still subject to examination.

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Stock Based Compensation (Details 2) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Stock Based Compensation [Line Items]
Stock Compensation Expense	$ 119,579	$ 136,612	$ 239,225	$ 210,128
Stock Grants [Member]
Stock Based Compensation [Line Items]
Stock Compensation Expense	50,627	80,091	101,253	132,552
Restricted Stock Grants [Member]
Stock Based Compensation [Line Items]
Stock Compensation Expense	68,351	53,076	136,702	65,694
Option Grants [Member]
Stock Based Compensation [Line Items]
Stock Compensation Expense	0	2,454	0	9,813
Employee Stock Purchase Plan [Member]
Stock Based Compensation [Line Items]
Stock Compensation Expense	$ 601	$ 991	$ 1,270	$ 2,069

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Stock Based Compensation (Tables)

6 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

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

A summary of stock option activity for the six months ended March 31, 2014 and 2013 is presented below:

	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2013		630,532	$	3.33		1.06
Outstanding and exercisable at September 30, 2013		630,532	$	3.33		1.06
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance at March 31, 2014		630,532	$	3.33		0.56
Outstanding and exercisable at March 31, 2014		630,532	$	3.33		0.56

	Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2012		794,483	$	3.34		1.75
Outstanding and exercisable at September 30, 2012		794,483	$	3.34		1.75
Granted		-		-
Exercised		-		-
Cancelled		(83,951)	$	3.69
Balance at March 31, 2013		710,532	$	3.30		1.41
Outstanding and exercisable at March 31, 2013		710,532	$	3.30		1.41

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

A summary of restricted stock activity for the six months ended March 31, 2014 and 2013 is presented below:

Restricted Stock Activity for the Six Months ended March 31, 2014	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2013		423,168	$	0.74
Granted		-	$	-
Vested		(50,000)	$	1.05
Cancelled		-	$	-
Nonvested at March 31, 2014		373,168	$	0.70

Restricted Stock Activity for the Six Months ended March 31, 2013	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2012		127,834	$	1.92
Granted		104,000	$	1.03
Vested		(53,000)	$	1.21
Cancelled		(20,000)	$	4.02
Nonvested at March 31, 2013		158,834	$	1.31

Schedule Of Stock Compensation Expense [Table Text Block]

Stock Compensation Expense for the six months ended March 31, 2014 and 2013 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	50,627	$	80,091
Restricted Stock Grants		68,351		53,076
Option Grants		-		2,454
Employee Stock Purchase Plan		601		991
Total	$	119,579	$	136,612

	Six Months Ended		Six Months Ended
Stock Compensation Expense	March 31, 2014		March 31, 2013
Stock Grants	$	101,253	$	132,552
Restricted Stock Grants		136,702		65,694
Option Grants		-		9,813
Employee Stock Purchase Plan		1,270		2,069
Total	$	239,225	$	210,128

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Inventories (Details) (USD $)	Mar. 31, 2014	Sep. 30, 2013
Inventory Current [Line Items]
Raw Materials	$ 1,741,628	$ 2,132,962
Work-in-Process	975,194	703,873
Finished Goods	262,728	303,409
Inventory, Net, Total	$ 2,979,550	$ 3,140,244

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]
Balance at Sep. 30, 2013	$ 10,645,888	$ 8,112	$ 17,476,003	$ 152,685	$ (6,004,570)	$ (986,342)	$ 0
Balance (in shares) at Sep. 30, 2013		16,224,402				810,160
Issuance of shares of common stock under employee stock purchase plan	8,471	3	8,468	0	0	0	0
Issuance of shares of common stock under employee stock purchase plan (in shares)		6,138				0
Stock-based compensation costs	237,954	44	237,910	0	0	0	0
Stock-based compensation costs (in shares)		88,213				0
Foreign currency translation adjustment	73,009	0	0	73,009	0	0	0
Net income (loss)	1,698,778	0	0	0	1,729,265	0	(30,487)
Balance at Mar. 31, 2014	$ 12,664,100	$ 8,159	$ 17,722,381	$ 225,694	$ (4,275,305)	$ (986,342)	$ (30,487)
Balance (in shares) at Mar. 31, 2014		16,318,753				810,160

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Inventories

6 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 4 - Inventories

Inventories, net of reserves, consists of the following:

	March 31,		September 30,
	2014		2013
Raw Materials	$	1,741,628	$	2,132,962
Work-in-Process		975,194		703,873
Finished Goods		262,728		303,409
	$	2,979,550	$	3,140,244

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Intangible Assets (Details) (USD $)						6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended			12 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Mar. 31, 2013	Mar. 31, 2014 Acquired Customer Base [Member]	Sep. 30, 2013 Acquired Customer Base [Member]	Mar. 31, 2014 Acquired Customer Base [Member] Minimum [Member]	Sep. 30, 2013 Acquired Customer Base [Member] Minimum [Member]	Mar. 31, 2014 Acquired Customer Base [Member] Maximum [Member]	Sep. 30, 2013 Acquired Customer Base [Member] Maximum [Member]	Mar. 31, 2014 Know How [Member]	Sep. 30, 2013 Know How [Member]	Mar. 31, 2014 Trade Names [Member]	Sep. 30, 2013 Trade Names [Member]	Sep. 30, 2013 Trade Names [Member] Minimum [Member]	Mar. 31, 2014 Biomedical Technologies [Member]	Sep. 30, 2013 Biomedical Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)						5 years	5 years	15 years	15 years	15 years	15 years			15 years	5 years	5 years
Gross Amount	$ 2,004,957	$ 6,505,440		$ 888,318	$ 5,145,638					$ 512,000	$ 512,000	$ 344,639	$ 547,802		$ 260,000	$ 300,000
Accumulated Amortization	683,396	3,020,857		375,380	2,645,715					196,349	179,283	0	75,856		111,667	120,003
Net	$ 1,321,561	$ 3,484,583	$ 3,776,038	$ 512,938	$ 2,499,923					$ 315,651	$ 332,717	$ 344,639	$ 471,946		$ 148,333	$ 179,997

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Segment, Customer and Geographical Reporting (Details Textual)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Three Customer [Member] | Sales Revenue, Net [Member]
Segment Reporting [Line Items]
Concentration Risk, Percentage		30.00%	24.00%	32.00%
Optics [Member]
Segment Reporting [Line Items]
Concentration Risk, Percentage			10.00%
Biomedical Technologies [Member] | Customer One [Member]
Segment Reporting [Line Items]
Concentration Risk, Percentage			100.00%	100.00%
Customer Concentration Risk [Member]
Segment Reporting [Line Items]
Concentration Risk, Percentage	69.00%	64.00%	67.00%	63.00%

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Earnings (Loss) Per Common Share (Tables)

6 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The computation of the weighted shares outstanding for the three months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,102,023		14,770,943
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		183,209		-
Dilutive Average Shares Outstanding		15,285,232		14,770,943

The computation of the weighted shares outstanding for the six months ended March 31 is as follows:

	March 31, 2014		March 31, 2013
Weighted average shares outstanding
Basic		15,061,890		14,721,733
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		155,025		-
Dilutive Average Shares Outstanding		15,216,915		14,721,733