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 JUNE 30, 2015

¨ 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.)
313 Washington Street, Suite 403, Newton, MA	02458
(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 August 6, 2015 there were 16,536,513 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 JUNE 30, 2015 AND SEPTEMBER 30, 2014	3
	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2015 AND 2014	5
	CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED JUNE 30, 2015	6
	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014	7
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 4.	Controls and Procedures	25
Item 5.	Other Information	25
PART II.	OTHER INFORMATION	25
Item 1A.	Risk Factors	25
Item 6.	Exhibits	25
Signatures		26

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,		September 30,
	2015		2014
ASSETS
Current Assets
Cash and cash equivalents	$	3,478,000	$	3,842,000
Accounts receivable, net of allowances of $153,000 and $299,000 at June 30, 2015 and September 30, 2014, respectively		3,362,000		3,240,000
Costs in excess of billings and unbilled receivables		1,271,000		1,235,000
Inventories, net of reserves		3,419,000		2,954,000
Prepaid expenses and other current assets		1,185,000		861,000
Total current assets		12,715,000		12,132,000
Property, Plant and Equipment, net		6,458,000		6,518,000
Other Assets
Intangibles, net		1,252,000		1,383,000
Goodwill		6,191,000		6,247,000
Deferred financing costs, net		29,000		39,000
Security and other deposits		238,000		58,000
Total other assets		7,710,000		7,727,000
Total Assets	$	26,883,000	$	26,377,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	3,664,000	$	2,329,000
Capital lease obligations, current		103,000		134,000
Convertible notes		1,784,000		1,433,000
Accounts payable		1,493,000		1,602,000
Deferred revenue		130,000		103,000
Accrued expenses and other liabilities		2,855,000		2,503,000
Total current liabilities		10,029,000		8,104,000
Long-term Liabilities
Long-term debt, net of current portion		2,045,000		3,282,000
Capital lease obligations, net of current portion		52,000		95,000
Pension liability		-		318,000
Deferred tax liability		245,000		264,000
Other long-term liabilities		47,000		-
Total long-term liabilities		2,389,000		3,959,000

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

3

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED) (Continued)

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

	June 30,			September 30,
	2015			2014
Stockholders' Equity
Common Stock, $0.0005 par value, 40,000,000 shares authorized, 17,313,366 and 17,140,182 shares issued, 16,503,206 and and 16,330,022 shares outstanding at June 30, 2015 and September 30, 2014, respectively.		9,000			9,000
Additional paid in capital		19,483,000			19,195,000
Accumulated other comprehensive income		278,000			98,000
Accumulated deficit		(4,175,000	)		(3,933,000	)
Less 810,160 shares of treasury stock - at cost		(986,000	)		(986,000	)
Total Dynasil stockholders' equity		14,609,000			14,383,000
Noncontrolling interest		(144,000	)		(69,000	)
Total stockholders' equity		14,465,000			14,314,000
Total Liabilities and Stockholders' Equity	$	26,883,000		$	26,377,000

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						Nine Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Net revenue	$	10,239,000		$	10,641,000		$	29,745,000		$	31,758,000
Cost of revenue		6,021,000			6,771,000			18,260,000			19,161,000
Gross profit		4,218,000			3,870,000			11,485,000			12,597,000
Operating expenses:
Sales and marketing		312,000			337,000			986,000			1,047,000
Research and development		382,000			301,000			1,172,000			1,025,000
General and administrative		3,041,000			3,106,000			9,443,000			9,505,000
Gain on sale of assets		8,000			(30,000	)		(178,000	)		(1,217,000	)
Total operating expenses		3,743,000			3,714,000			11,423,000			10,360,000
Income from operations		475,000			156,000			62,000			2,237,000
Interest expense, net		124,000			146,000			372,000			567,000
Income (loss) before taxes		351,000			10,000			(310,000	)		1,670,000
Income tax provision (credit)		(14,000	)		(48,000	)		7,000			(87,000	)
Net income (loss)		365,000			58,000			(317,000	)		1,757,000
Less: Net loss attributable to noncontrolling interest		(23,000	)		(16,000	)		(75,000	)		(47,000	)
Net income (loss) attributable to common stockholders	$	388,000		$	74,000		$	(242,000	)	$	1,804,000
Net income (loss)	$	365,000		$	58,000		$	(317,000	)	$	1,757,000
Other comprehensive income (loss):
Decrease in pension liability		-			-			318,000			-
Foreign currency translation		251,000			142,000			(138,000	)		215,000
Total comprehensive income (loss)	$	616,000		$	200,000		$	(137,000	)	$	1,972,000
Basic net income (loss) per common share	$	0.02		$	0.00		$	(0.01	)	$	0.12
Diluted net income (loss) per common share	$	0.02		$	0.00		$	(0.01	)	$	0.12
Weighted average shares outstanding
Basic		16,439,637			15,280,607			16,368,313			15,134,377
Diluted		16,447,088			15,299,422			16,368,313			15,145,639

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

5

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the nine months ended June 30, 2015						Additional			Other														Total
	Common			Common		Paid-in			Comprehensive			Accumulated			Treasury Stock					Noncontrolling			Stockholders'
	Shares			Amount		Capital			Income			Deficit			Shares		Amount			Interest			Equity
Balance, September 30, 2014		17,140,182		$	9,000	$	19,195,000		$	98,000		$	(3,933,000	)		810,160	$	(986,000	)	$	(69,000	)	$	14,314,000
Issuance of shares of common stock
under employee stock purchase plan		7,633			-		9,000			-			-			-		-			-			9,000
Stock-based compensation costs		175,193			-		296,000			-			-			-		-			-			296,000
Adjustment for escrow settlement		(9,642	)		-		(17,000	)		-			-			-		-			-			(17,000	)
Settlement of pension obligation, net of tax		-			-		-			318,000			-			-		-			-			318,000
Foreign currency translation adjustment		-			-		-			(138,000	)		-			-		-			-			(138,000	)
Net loss		-			-		-			-			(242,000	)		-		-			(75,000	)		(317,000	)
Balance, June 30, 2015		17,313,366		$	9,000	$	19,483,000		$	278,000		$	(4,175,000	)		810,160	$	(986,000	)	$	(144,000	)	$	14,465,000

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

6

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	June 30,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(317,000	)	$	1,757,000
Adjustments to reconcile net income (loss) to net cash:
Stock compensation expense		298,000			403,000
Foreign exchange loss (gain)		(14,000	)		30,000
Gain on sale of assets		(178,000	)		(1,217,000	)
Depreciation and amortization		898,000			809,000
Pension expense		318,000			-
Other		110,000			80,000
Other changes in assets and libilities:
Accounts receivable, net		(122,000	)		(70,000	)
Inventories		(530,000	)		(492,000	)
Costs in excess of billings and unbilled receivables		(36,000	)		69,000
Prepaid expenses and other assets		(489,000	)		(111,000	)
Accounts payable		(116,000	)		185,000
Accrued expenses and other liabilities		14,000			65,000
Deferred revenue		27,000			(382,000	)
Net cash from operating activities		(137,000	)		1,126,000
Cash flows from investing activities:
Acquisitions		-			(500,000	)
Proceeds from sale of assets		244,000			4,357,000
Purchases of property, plant and equipment		(747,000	)		(879,000	)
Net cash from investing activities		(503,000	)		2,978,000
Cash flows from financing activities:
Proceeds from issuance of common stock		9,000			11,000
Net proceeds from issuance of convertible notes		298,000			810,000
Principal payments on capital leases		(110,000	)		(96,000	)
Proceeds from short and long-term debt		300,000			2,707,000
Payments on long-term debt		(202,000	)		(6,841,000	)
Net cash from financing activities		295,000			(3,409,000	)
Effect of exchange rates on cash and cash equivalents		(19,000	)		(47,000	)
Net change in cash and cash equivalents		(364,000	)		648,000
Cash and cash equivalents, beginning	$	3,842,000		$	2,437,000
Cash and cash equivalents, ending	$	3,478,000		$	3,085,000
Supplemental disclosures of cash flow information:
Non cash activities:
Assets acquired	$	-		$	1,739,000
Less: common shares issued in acquisition as consideration		-			1,239,000
Cash paid in acquisition	$	-		$	500,000
Assets purchased under capital leases	$	73,000		$	-
Tax payments (refunds)	$	(8,000	)	$	-

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

7

DYNASIL CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 - Basis of Presentation

The accompanying consolidated balance sheet as of June 30, 2015, the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended June 30, 2015 and 2014, changes in stockholders’ equity for the nine months ended June 30, 2015 and cash flows for the nine months ended June 30, 2015 and 2014 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 our 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, 2014 Annual Report on Form 10-K previously filed by the Company with the Securities and Exchange Commission.

The Company considers events or transactions that have occurred after the unaudited consolidated balance sheet date of June 30, 2015, 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.

Note 2 – Acquisitions and Divestitures

On June 26, 2014, the Company and its wholly owned subsidiary, Evaporated Metal Films Corp. (“EMF”) acquired substantially all the assets of DichroTec Thin Films, LLC (“DichroTec”), a manufacturer of optical thin film coatings. The total purchase price paid of $1.7 million, consisting of approximately $0.5 million in cash and 690,000 shares of Dynasil common stock, was allocated primarily to machinery and equipment. DichroTec reported unaudited revenues of approximately $1.9 million for the twelve months ended December 31, 2013.

The Company sold its Lead Paint Detector and Gamma Medical Probe businesses in the first quarter of fiscal 2014. These businesses constituted substantially all the Company’s Instruments segment but did not qualify to be reported as discontinued operations. The businesses were sold for an aggregate of approximately $4.7 million, including the assumption of certain liabilities of the Company and a possible contingent payment and resulted in a gain of $1.2 million which is included in Income from Operations in the nine months ended June 30, 2014. The Company used $3.9 million of the proceeds from the two transactions to reduce its indebtedness to Santander Bank, N.A., its former lender.

In the three months ended December 31, 2014, the Company recorded a gain of $0.2 million in connection with the sale of a product line in its Optics segment.

8

Note 3 – Xcede Technologies, Inc. Joint Venture

In October, 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 has raised approximately $1.7 million in external funding in the form of Convertible Notes (the “Notes”) from outside investors and to certain officers and directors of the Company. The Notes accrue interest at 5% and, as amended, are due after June 30, 2016, upon the demand of the holders of a majority of the aggregate outstanding principal amount of the Notes.

Upon the closing of a capital stock financing raising at least $3.0 million, inclusive of the Notes and interest, the outstanding principal amount of the Notes plus all accrued interest will be converted into shares of the same capital stock sold in the financing at a 20% discount to the price per share of that capital stock. Alternatively, at any time prior to a capital stock financing the Note holders can convert, at their option, the principal amount of the Notes plus accrued interest into common stock based on a $5 million valuation.

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. In 2015, Xcede has recognized $21,000 of stock compensation expense related to options to purchase Xcede’s stock granted to its employees and directors.

The Company expects Xcede to require significant additional funding prior to commencing human trials.

Note 4 - Inventories

Inventories, net of reserves, consists of the following:

	June 30,		September 30,
	2015		2014
Raw Materials	$	2,033,000	$	1,805,000
Work-in-Process		983,000		858,000
Finished Goods		403,000		291,000
	$	3,419,000	$	2,954,000

Note 5 – Intangible Assets

Intangible assets at June 30, 2015 and September 30, 2014 consist of the following:

	Useful	Gross		Accumulated
June 30, 2015	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	851,000	$	458,000	$	393,000
Know How	15		512,000		239,000		273,000
Trade Names	Indefinite		329,000		-		329,000
Patents	20		182,000		-		182,000
Biomedical Technologies	5		260,000		185,000		75,000
		$	2,134,000	$	882,000	$	1,252,000
	Useful	Gross		Accumulated
September 30, 2014	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	877,000	$	409,000	$	468,000
Know How	15		512,000		213,000		299,000
Trade Names	Indefinite		339,000		-		339,000
Patents	20		159,000		-		159,000
Biomedical Technologies	5		260,000		142,000		118,000
		$	2,147,000	$	764,000	$	1,383,000

9

Amortization expense for the three months ended June 30, 2015 and 2014 was $43,000 and $44,000, respectively. Amortization expense for the nine months ended June 30, 2015 and 2014 was $128,000 and $133,000, respectively.

Estimated amortization expense for each of the next five fiscal years and thereafter is as follows:

	2015 (3 months)		2016		2017		2018		2019		Thereafter		Total
Acquired Customer Base	$	20,000	$	80,000	$	80,000	$	80,000	$	80,000	$	53,000	$	393,000
Know How		9,000		34,000		34,000		34,000		34,000		128,000		273,000
Patents		2,000		9,000		9,000		9,000		9,000		144,000		182,000
Biomedical Technologies		15,000		60,000		-		-		-		-		75,000
	$	46,000	$	183,000	$	123,000	$	123,000	$	123,000	$	325,000	$	923,000

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 nine months ended June 30, 2015.

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 nine months ended June 30, 2015 and 2014, no common stock options were included in the calculation of dilutive shares as all of the 58,212 and 630,532 common stock options outstanding, respectively, had exercise prices above the current quarterly average market price per share and their inclusion would be anti-dilutive. Additionally, for the nine months ended June 30, 2015, 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 be anti-dilutive.

10

The computation of the weighted shares outstanding for the three months ended June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,439,637		15,280,607
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		7,451		18,815
Dilutive Average Shares Outstanding		16,447,088		15,299,422

The computation of the weighted shares outstanding for the nine months ended June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,368,313		15,134,377
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		-		11,262
Dilutive Average Shares Outstanding		16,368,313		15,145,639

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. The weighted average assumptions for the stock option grant during the nine months ended June 30, 2015 used in the Black-Scholes option pricing model were as follows:

	Nine Months Ended
	June 30, 2015
Expected term in years		3 years
Risk-free interest rate		0.77	%
Expected volatility		89.46	%
Expected dividend yield		0.00	%

The expected volatility was determined with reference to the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that the options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant. The dividend yield is expected to be 0.00% because historically the Company has not paid dividends on common stock.

During the three months ended June 30, 2015, no stock options were granted. During the nine months ended June 30, 2015, 36,232 stock options were granted at the exercise price of $1.82 per share. These options were granted as a component of Directors’ Compensation for the twelve months ending January 31, 2016 and were fully exercisable when granted, and expire three years from the grant date. The stock-based compensation expense of $25,000 will be recognized over the requisite service period.

11

A summary of stock option activity for the nine months ended June 30, 2015 is presented below:

	Options Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remain Contractual Term (in Years)
Balance at September 30, 2014		430,532		$	3.33		0.31
Granted		36,232			1.82
Exercised		-			-
Cancelled		(408,552	)		3.99
Balance at June 30, 2015		58,212		$	2.28		2.22
Outstanding and exercisable at June 30, 2015		58,212		$	2.28		2.22

A summary of restricted stock activity for the nine months ended June 30, 2015 is presented below:

Restricted Stock Activity for the Nine Months ended June 30, 2015	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at September 30, 2014		54,000		$	1.04
Granted		-			-
Vested		(27,000	)	$	1.04
Cancelled		-			-
Nonvested at June 30, 2015		27,000		$	1.04

Stock Compensation Expense for the three and nine months ended June 30, 2015 and 2014 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	106,000	$	112,000
Restricted Stock Grants		7,000		51,000
Option Grants		6,000		-
Employee Stock Purchase Plan		1,000		1,000
Total	$	120,000	$	164,000
	Nine Months Ended		Nine Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	243,000	$	213,000
Restricted Stock Grants		21,000		188,000
Option Grants		10,000		-
Employee Stock Purchase Plan		3,000		2,000
Total	$	277,000	$	403,000

At June 30, 2015 there was approximately $46,000 in unrecognized stock compensation cost, which is expected to be recognized over a weighted average period of two months.

In addition to the above stock compensation expense, the Company’s 90%-owned Xcede subsidiary issued options for its common stock to certain employees and directors that resulted in approximately $7,000 and $21,000 of stock compensation expense in the three and nine months ended June 30, 2015. At June 30, 2015 there was approximately $98,000 in unrecognized Xcede stock compensation cost.

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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”). Substantially all the operating assets of the Instruments segment were sold in the three months ended December 31, 2013.

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 Biomedical segment, through Xcede Technologies, Inc., a majority owned, joint venture, 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. The businesses comprising substantially all the Instruments segment were sold in the first quarter of fiscal 2014 as discussed in Note 2.

The Company’s segment information for the three months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Three Months Ended June 30,
2015
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	4,626,000		$	5,613,000		$	-		$	-		$	10,239,000
Gross Profit		2,027,000			2,191,000			-			-			4,218,000
GM %		43.8	%		39.0	%		-			-			41.2	%
SG&A		1,934,000			1,565,000			-			236,000			3,735,000
Loss on sale of assets		-			(8,000	)		-			-			(8,000	)
Operating Income (Loss)		93,000			618,000			-			(236,000	)		475,000
Depreciation and Amortization		74,000			223,000			-			15,000			312,000
Capital expenditures		-			270,000			-			21,000			291,000
Intangibles, Net		273,000			722,000			-			257,000			1,252,000
Goodwill		4,939,000			1,252,000			-			-			6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000		$	756,000		$	26,883,000
Results of Operations for the Three Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	5,461,000		$	5,172,000		$	-		$	8,000		$	10,641,000
Gross Profit		2,121,000			1,741,000			-			8,000			3,870,000
GM %		38.8	%		33.7	%		-			100.0	%		36.4	%
SG&A		2,057,000			1,516,000			(10,000	)		181,000			3,744,000
Gain on sale of assets		-			-			30,000			-			30,000
Operating Income (Loss)		64,000			225,000			40,000			(173,000	)		156,000
Depreciation and Amortization		70,000			190,000			-			15,000			275,000
Capital expenditures		-			1,937,000			-			-			1,937,000
Intangibles, Net		307,000			893,000			-			133,000			1,333,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

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The Company’s segment information for the nine months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Nine Months Ended June 30,
2015
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	13,964,000		$	15,781,000		$	-		$	-		$	29,745,000
Gross Profit		6,077,000			5,408,000			-			-			11,485,000
GM %		43.5	%		34.3	%		-			-			38.6	%
SG&A		5,712,000			5,150,000			-			739,000			11,601,000
Gain on sale of assets		-			178,000			-			-			178,000
Operating Income (Loss)		365,000			436,000			-			(739,000	)		62,000
Depreciation and Amortization		222,000			631,000			-			45,000			898,000
Capital expenditures		4,000			666,000			-			77,000			747,000
Intangibles, Net		273,000			722,000			-			257,000			1,252,000
Goodwill		4,939,000			1,252,000			-			-			6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000		$	756,000		$	26,883,000
Results of Operations for the Nine Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	16,915,000		$	14,059,000		$	773,000		$	11,000		$	31,758,000
Gross Profit		7,093,000			5,175,000			318,000			11,000			12,597,000
GM %		41.9	%		36.8	%		41.1	%		100.0	%		39.7	%
SG&A		6,439,000			4,030,000			529,000			579,000			11,577,000
Gain on sale of assets		-			-			1,217,000			-			1,217,000
Operating Income (Loss)		654,000			1,145,000			1,006,000			(568,000	)		2,237,000
Depreciation and Amortization		209,000			551,000			2,000			47,000			809,000
Capital expenditures		12,000			2,606,000			-			-			2,618,000
Intangibles, Net		307,000			893,000			-			133,000			1,333,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

Customer Financial Information

For the three and nine months ended June 30, 2015, four customers of the Contract Research segment, all various agencies of the U.S. Government, each represented more than 10% of the total segment revenue. For the three and nine months ended June 30, 2014, three customers, all various agencies of the U.S. Government, each represented more than 10% of the total segment revenue. For the three months ended June 30, 2015 and 2014, these customers made up 64% and 68%, respectively, of Contract Research revenue. For the nine months ended June 30, 2015 and 2014, these customers made up 68% and 67%, respectively, of Contract Research revenue.

For the three months ended June 30, 2015, two customers in the Optics segment each represented more than 10% of the total segment revenue. For the nine months ended June 30, 2015, no customer made up more than 10% of the segment revenue. For the three and nine months ended June 30, 2014, a single customer in the Optics segment made up 18% and 10%, respectively of the total segment revenue.

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Geographic Financial Information

Revenue by geographic location in total and as a percentage of total revenue, for the three months ended June 30, 2015 and 2014 are as follows:

	Three Months Ended					Three Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,228,000		80	%	$	8,255,000		78	%
Europe		1,140,000		11	%		689,000		6	%
Other		871,000		9	%		1,697,000		16	%
	$	10,239,000		100	%	$	10,641,000		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the nine months ended June 30, 2015 and 2014 are as follows:

	Nine Months Ended					Nine Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	23,892,000		80	%	$	25,784,000		81	%
Europe		3,147,000		11	%		2,363,000		8	%
Other		2,706,000		9	%		3,611,000		11	%
	$	29,745,000		100	%	$	31,758,000		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 June 30, 2015 and September 30, 2014, 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 June 30, 2015 and September 30, 2014, 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 (4.0%) and (2.4%) for the three and nine months ended June 30, 2015, respectively, and (480.0%) and (5.2%) for the three and nine months ended June 30, 2014, 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.

15

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 – Settlement of Pension Liability

On December 1, 2014, the Company terminated and settled its pension liability with each of the remaining participants in the EMF Defined Benefit Plan (the “Plan”). The Plan had been frozen since 2006. The total benefit payments made upon termination were $688,000 and the actual plan assets at the date of termination were $332,000. The Company funded and expensed the difference upon settlement of the Plan.

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 contained herein and in the Dynasil Corporation of America ("Dynasil", the "Company" or "we") Form 10-K for the fiscal year ended September 30, 2014.

General Business Overview

Operations

Revenue for the third quarter of fiscal year 2015, which ended June 30, 2015, was $10.2 million, a decrease of 3.8% compared with revenue of $10.6 million for the quarter ended June 30, 2014. The decrease is attributable to a $0.8 million decline in revenue from the Contracts Research segment due to reductions and slowdowns in the awarding of government research grants that began in 2014 and the funding of those awards, which impacted the segment’s revenue beginning in the third quarter of 2014. Contract Research segment revenues have been relatively unchanged in each of the first three quarters of fiscal 2015 and are expected to increase modestly in the current quarter. The lower Contract Research segment revenues were partially offset by a $0.4 million increase in revenue in the Optics segment as a result of internal revenue growth and the acquisition of the assets of DichroTec Thin Films LLC (“DichroTec”) in June, 2014.

Cost of revenue for the third quarter of 2015 was $6.0 million, a decrease of 11.1% compared with $6.8 million for the quarter ended June 30, 2014 primarily as a result of a $0.7 million decrease in the cost of revenue associated with the Contract Research segment revenue decrease discussed above.

Total operating expenses remained essentially unchanged at $3.7 million for the three month periods ended June 30, 2015 and 2014 as SG&A declined slightly in the Contract Research segment while increasing slightly in the Optics and Biomedical segments.

Income from operations for the quarter ended June 30, 2015 was $0.5 million compared with income of $0.2 million for the quarter ended June 30, 2014. The increase in income from operations was primarily due to higher gross profit in the Optics segment and, to a lesser extent, lower SG&A expenses in both the Contract Research and Optics segment and decreased gross profit in the Contracts Research segment.

Net income was $0.4 million, or $0.02 per share, for the quarter ended June 30, 2015, compared with approximately breakeven income for the quarter ended June 30, 2014.

The assets within our Instruments segment were substantially disposed of in the first quarter of 2014.

Our Biomedical segment primarily consists of the results of our majority owned joint venture, Xcede. We have been and are continuing to incur approximately $1 million annually in research expenses in Xcede as it continues to develop a tissue sealant technology for a wide spectrum of applications. We are funding these research expenses through cash raised from the issuance of Xcede convertible notes to outside investors and to certain officers and directors of the Company. We expect Xcede’s expenses to increase as it prepares for human trials, which are expected to commence in fiscal 2017. Xcede raised approximately $300,000 in the third quarter of 2015 and management is continuing to pursue various financing alternatives to fund these research expenses.

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Commercialization of technologies from our extensive research and development portfolio and strategic acquisitions are expected to be key 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. 

Results of Operations

Results of Operations for the Three Months Ended June 30,
2015
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	4,626,000		$	5,613,000		$	-		$	-		$	10,239,000
Gross Profit		2,027,000			2,191,000			-			-			4,218,000
GM %		43.8	%		39.0	%		-			-			41.2	%
SG&A		1,934,000			1,565,000			-			236,000			3,735,000
Loss on sale of assets		-			(8,000	)		-			-			(8,000	)
Operating Income (Loss)		93,000			618,000			-			(236,000	)		475,000
Depreciation and Amortization		74,000			223,000			-			15,000			312,000
Capital expenditures		-			270,000			-			21,000			291,000
Intangibles, Net		273,000			722,000			-			257,000			1,252,000
Goodwill		4,939,000			1,252,000			-			-			6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000		$	756,000		$	26,883,000
Results of Operations for the Three Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	5,461,000		$	5,172,000		$	-		$	8,000		$	10,641,000
Gross Profit		2,121,000			1,741,000			-			8,000			3,870,000
GM %		38.8	%		33.7	%		-			100.0	%		36.4	%
SG&A		2,057,000			1,516,000			(10,000	)		181,000			3,744,000
Gain on sale of assets		-			-			30,000			-			30,000
Operating Income (Loss)		64,000			225,000			40,000			(173,000	)		156,000
Depreciation and Amortization		70,000			190,000			-			15,000			275,000
Capital expenditures		-			1,937,000			-			-			1,937,000
Intangibles, Net		307,000			893,000			-			1,330,000			2,530,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

Revenue for the third quarter of fiscal year 2015, which ended June 30, 2015, declined $0.4 million or 3.8% to $10.2 million. Contract Research segment revenues decreased approximately $0.8 million or 15.3%, compared with the same period in the prior year, primarily as a result of a slowdown in both government research award grants and the funding of awards previously granted that began in 2014. Management believes this slowdown reflects continuing government budget pressure to reduce spending across the majority of the agencies that we contract with. The research backlog for the Contracts Research segment has decreased slightly to approximately $35 million at June 30, 2015 (of which approximately $12 million is currently funded and in process) compared to $36 million at March 31, 2015. At September 30, 2014, research backlog was approximately $30 million.

The Optics segment revenue increased approximately $0.4 million or 8.5% for the three months ended June 30, 2015, compared with the same period in the prior year, as a result of internal growth in a number of the businesses within the segment and the acquisition of the assets of DichroTec in June, 2014.

The Biomedical segment has no revenues as it is currently researching and developing a tissue sealant technology.

17

The Instruments segment has no revenues, as substantially all of its assets were disposed of in the first quarter of fiscal 2014.

Gross profit for the three months ended June 30, 2015 was $4.2 million, or 41.2% of revenues, compared to $3.9 million or 36.4% of revenues for the three months ended June 30, 2014. Gross profit decreased $0.1 million in the Contract Research segment while gross profit margins improved to 43.8% in 2015 from 38.8% last year primarily as a result of expense reduction actions taken in 2014 to better align expenses with the lower revenue levels. Gross profit for the Optics segment increased $0.5 million to 39.0% of revenues at June 30, 2015 compared to 33.7% of revenues for the quarter ended June 30, 2014 as a result of higher revenues without a corresponding increase in overhead expenses, management actions to improve yields in certain product lines and a reduction in sales of certain low margin products.

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 were $3.7 million for both the three months ended June 30, 2015 and 2014. Operating expenses for the Contract Research segment decreased $0.1 million due to cost saving measures implemented beginning in the third quarter of 2014, while operating expenses in the Optics and Biomedical segments increased $0.1 million.

As a result of the items discussed above, income from operations for the three months ended June 30, 2015 was $0.5 million compared to income from operations of $0.2 million for the same period in fiscal 2014.

Net interest expense was approximately $0.1 million for the three months ended June 30, 2015 and 2014.

Income tax expense for the three months ended June 30, 2015 consists primarily of state tax expense offset by certain U.K. tax research credits.

Net income for the three months ended June 30, 2015 was $0.4 million, or $0.02 in basic earnings per share, compared with approximately breakeven income for the quarter ended June 30, 2014.

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Results of Operations – Year to Date

Results of Operations for the Nine Months Ended June 30,
2015
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	13,964,000		$	15,781,000		$	-		$	-		$	29,745,000
Gross Profit		6,077,000			5,408,000			-			-			11,485,000
GM %		43.5	%		34.3	%		-			-			38.6	%
SG&A		5,712,000			5,150,000			-			739,000			11,601,000
Gain on sale of assets		-			178,000			-			-			178,000
Operating Income (Loss)		365,000			436,000			-			(739,000	)		62,000
Depreciation and Amortization		222,000			631,000			-			45,000			898,000
Capital expenditures		4,000			666,000			-			77,000			747,000
Intangibles, Net		273,000			722,000			-			257,000			1,252,000
Goodwill		4,939,000			1,252,000			-			-			6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000		$	756,000		$	26,883,000
Results of Operations for the Nine Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	16,915,000		$	14,059,000		$	773,000		$	11,000		$	31,758,000
Gross Profit		7,093,000			5,175,000			318,000			11,000			12,597,000
GM %		41.9	%		36.8	%		41.1	%		100.0	%		39.7	%
SG&A		6,439,000			4,030,000			529,000			579,000			11,577,000
Gain on sale of assets		-			-			1,217,000			-			1,217,000
Operating Income (Loss)		654,000			1,145,000			1,006,000			(568,000	)		2,237,000
Depreciation and Amortization		209,000			551,000			2,000			47,000			809,000
Capital expenditures		12,000			2,606,000			-			-			2,618,000
Intangibles, Net		307,000			893,000			-			133,000			1,333,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

Revenue for the nine months ended June 30, 2015 was down $2.0 million or 6.3% to $29.7 million compared to $31.8 million for the nine months ended June 30, 2014.

Revenue from our Contract Research segment decreased $3.0 million or 17.4% for the nine months ended June 30, 2015 compared to the same period in 2014, primarily as a result of a drop in government research awards granted to the Contract Research segment beginning in 2014 as well as delays in funding previously granted awards. Contract Research segment revenues have been relatively unchanged in each of the first three quarters of fiscal 2015 and are expected to increase modestly in the current quarter. Management expects government budget pressures on spending and delays in funding subsequent to the granting of awards to add increased variability to the business.

The Optics segment revenue increased $1.7 million or 12.2% for the nine months ended June 30, 2015, compared with the same period in the prior year, as a result of the internal growth and, to a lesser extent, the acquisition of the DichroTec business in June 2014.

Revenue from our Instruments segment decreased $0.8 million for the nine months ended June 30, 2015, primarily as a result of the sale of the lead paint and medical product businesses in the first quarter of fiscal 2014.

The Biomedical segment had no revenue in the nine months ended June 30, 2015.

19

Gross profit for the nine months ended June 30, 2015 was $11.5 million, or 38.6% of sales, compared to $12.6 million, or 39.7% of sales for the nine months ended June 30, 2014.

Gross profit for the Contract Research segment declined $1.0 million to $6.1 million for the nine months ended June 30, 2015 compared to the nine months ended June 30, 2014 primarily as a result of lower billable hours reflecting the lower level of government research awards. As a result of cost saving measures implemented during 2014 in response to the lower level of government contract awards, the Contract Research segment gross profit as a percent of sales increased to 43.5% for the nine months ended June 30, 2015 compared to 41.9% for the same period in 2014.

Gross profit for the Optics segment increased approximately $0.2 million to $5.4 million for the nine months ended June 30, 2015 compared to the nine months ended June 30, 2014 as a result of changes in the mix of products sold and improved yields on certain products sold.

There was no gross profit associated with the Instruments segment in fiscal 2015 due to the sales of the businesses comprising substantially all the Instrument segment in fiscal year 2014.

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 were flat at $11.6 million for the nine months ended June 30, 2015 compared to the same period in 2014 as decreased expenses in the Contract Research and Instruments segments were substantially offset by increased expenses in the Optics segment due to the acquisition of DichroTec in June 2014 and a $0.4 million expense associated with the termination and settlement of a pension plan.

Income from operations for the nine months ended June 30, 2015 was $0.1 million compared to income from operations of $2.2 million for the prior year comparable period. The decrease in income of $2.1 million is primarily a result of the $1.2 million gain on the sale of the businesses in the Instruments segment recorded in the first nine months of fiscal 2014 as well as a $1.0 million reduction in income from operations associated with the Instruments segment businesses that were sold in 2014. The Contract Research and Optics segments had decreases in income from operations for the nine months ended June 30, 2015 compared to the nine months ended June 30, 2014 of $0.3 million and $0.7 million, respectively. The Contract Research segment decrease is a result of the decreased revenues partially offset by the decreased costs discussed above. The Optics segment decrease is a result of a $350,000 nonrefundable payment recorded in 2014 for which the associated costs had been previously recognized, the DichroTec acquisition and the pension plan settlement discussed previously.

Net interest expense for the nine months ended June 30, 2015 decreased to $0.4 million from $0.6 million for the same period in 2014 as a result of the elimination of default interest due to our subordinated lender prior to May 2014, partially offset by the accrual of interest on the Xcede convertible notes issued in 2014 and 2015.

Income tax expense for the nine months ended June 30, 2015 consisted primarily of state tax expense offset by certain U.K. tax research credits.

Net income (loss) for the nine months ended June 30, 2015 was ($0.3) million or ($0.01) per share, compared with income of $1.8 million or $0.12 per share for the nine months ended June 30, 2014.

Liquidity and Capital Resources

Liquidity Overview and Outlook

Net cash as of June 30, 2015 was $3.5 million or approximately $0.3 million less than the net cash of $3.8 million at September 30, 2014.

As of June 30, 2015, the Company was in compliance with the terms of all its outstanding indebtedness which consisted of $2.3 million of senior debt borrowed under a revolving line of credit with Middlesex Savings Bank and $3.0 million of subordinated debt owed to Massachusetts Capital Resources Company. The Company has $1.7 million of additional availability under its Middlesex Savings Bank line of credit based on its collateral calculations as of June 30, 2015. Management believes that the cash and availability under the line of credit discussed above are adequate to meet the Company’s current liquidity requirements for the next twelve months.

20

The Company’s Xcede subsidiary currently has $0.5 million of cash remaining from its convertible notes financings. In May 2015, the terms of the convertible notes were amended to provide for an additional $1 million of convertible notes issuances (of which approximately $0.3 million was issued in the third quarter of 2015) and to extend the notes maturity date. The terms of the convertible notes now provide that the notes are payable upon the demand of the holders of a majority of the aggregate outstanding amount of the notes, after June 30, 2016.

Management believes that Xcede has sufficient cash on hand to fund Xcede’s operations for at least the next three months. Management is continuing to pursue various financing alternatives.

Cash From Operating Activities

In total, including the changes in accounts receivable, prepaid expenses, accounts payable and accrued expenses, operating activities used cash of $0.1 million for the nine months ended June 30, 2015. Approximately $1.2 million of the cash used is a result of deposits for new equipment purchases and balance sheet changes as a result of normal cyclical billing and payment activity.

Cash From Investing and Financing Activities

The Company generated $0.2 million from the sale of a product line and used cash of approximately $0.7 million for the purchase of property, plant and equipment for the nine months ended June 30, 2015.

Total outstanding bank debt for the nine months ended June 30, 2015 increased approximately $0.1 million to $5.7 million from $5.6 million at September 30, 2014. Net cash generated from financing activities was approximately $0.3 million for the nine months ended June 30, 2015 and include the issuance of approximately $0.3 million of Xcede convertible notes.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies or critical accounting estimates since September 30, 2014. We have not adopted any accounting policies since September 30, 2014 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, 2014 as well as the notes to the financial statements contained 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.

21

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.

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.

Intangible Assets

The Company’s intangible assets consist of acquired customer relationships and trade names of Hilger Crystals, Ltd., acquired know-how of Radiation Monitoring Devices, Inc. and purchased and patented biomedical technologies within the Biomedical segment. The Company amortizes its intangible assets with definitive lives over their useful lives, which range from 5 to 20 years, based on the time period the Company expects to receive the economic benefit from these assets. No impairment charge was recorded during the three or nine month periods ended June 30, 2015 or 2014.

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.

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.

22

Stock-Based Compensation

The Company accounts for stock-based compensation using fair value. Compensation costs are recognized for stock-based compensation granted to employees and directors. Options and restricted stock awards are recorded as an expense over the requisite service period based on the grant date estimated fair value of the grant, which in the case of options is 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.

RECENT ACCOUNTING PRONOUNCEMENTS

Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08, which provides new guidance on reporting discontinued operations and disclosures of disposals. Under the new guidance, only disposals representing a strategic shift in operations will be presented as discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of the company that does not qualify for discontinued operations reporting. This guidance is effective for the Company beginning in fiscal 2016. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Revenue from Contracts with Customers (Topic 606) Section A—Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). In May 2014, the FASB issued ASU No. 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new guidance is effective for the Company beginning in fiscal 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

Compensation—Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. In June 2014, the FASB issued ASU No. 2014-12, which clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. Under the new guidance, a performance target that affects vesting and could be achieved after completion of the service period should be treated as a performance condition under FASB Accounting Standards Codification (ASC) 718 and, as a result, should not be included in the estimation of the grant-date fair value of the award. An entity should recognize compensation cost for the award when it becomes probable that the performance target will be achieved. In the event that an entity determines that it is probable that a performance target will be achieved before the end of the service period, the compensation cost of the award should be recognized prospectively over the remaining service period. The new guidance is effective for the Company beginning in fiscal 2016. Early adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

23

Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In August 2014, the FASB issued ASU No. 2014-15, which states that under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this ASU should be followed to determine whether to disclose information about the relevant conditions and events. The new guidance is effective for the Company beginning in fiscal 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU; however, management does not currently believe that the Company will meet the conditions that would subject its financial statements to additional disclosure.

Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued ASU No. 2015-01, which eliminates from GAAP the concept of extraordinary items. The ASU retains and expands the existing presentation and disclosure guidance for items that are unusual in nature or occur infrequently to also include items that are both unusual in nature and infrequently occurring. The provisions of this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted, provided that presentation applied to the beginning of the fiscal year of adoption. This amendment is applicable to us beginning in the first quarter of 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued ASU No. 2015-03, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The provisions of this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.

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 Xcede and Dynasil Biomedical, uncertainty of the impact of the DichroTec acquisition, 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, 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 17, 2014, 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.

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ITEM 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation and supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified under the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2015. Based on this evaluation, our management concluded that as of June 30, 2015, these disclosure controls and procedures were effective at the reasonable assurance level.

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.

ITEM 5 Other Information

During the quarter ended June 30, 2015, Xcede Technologies, Inc., the Company’s 90%-owned subsidiary, issued convertible promissory notes in the aggregate principal amount of $300,000 to certain investors and certain officers and directors of the Company. The notes accrue interest at 5% and are due after June 30, 2016, upon the demand of the holders of a majority of the aggregate outstanding principal amount of all convertible notes issued by Xcede and currently outstanding.

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, 2014, 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.

ITEM 6 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 August 12, 2015 issued by Dynasil Corporation of America announcing its financial results for the quarter ended June 30, 2015.

25

101 The following materials from Dynasil Corporation of America’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2015 and September 30, 2014, (ii) Consolidated Statements of Operations for the three and nine months ended June 30, 2015 and 2014, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended June 30, 2015; (iv) Consolidated Statements of Cash Flows for the nine months ended June 30, 2015 and 2014, and (v) Notes to Consolidated Financial Statements.

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: August 12, 2015
	Peter Sulick,
	Chief Executive Officer and President
	/s/ Thomas C. Leonard	DATED: August 12, 2015
	Thomas C. Leonard,
	Chief Financial Officer

26

EX-31.1(A)

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:  August 12, 2015	/s/ Peter Sulick
	Peter Sulick
	Chief Executive Officer and President

EX-31.1(B)

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:  August 12, 2015	/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 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Peter Sulick, 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

Chief Executive Officer and President

/s/ Thomas C. Leonard

Thomas C. Leonard

Chief Financial Officer

August 12, 2015

EX-99.1

Exhibit 99.1

Contact:

Patty Kehe

Corporate Secretary

Dynasil Corporation of America

Phone: (617) 668-6855

pkehe@dynasil.com

Dynasil Corporation of America Reports

Third Quarter Fiscal 2015 Financial Results

Operating Income for the Quarter increases 300%

Newton, MA, August 12, 2015 – Dynasil Corporation of America (NASDAQ: DYSL), a developer and manufacturer of optics and photonics products, optical detection and analysis technology and components for the homeland security, medical and industrial markets, today announced financial results for the fiscal 2015 third quarter ended June 30, 2015.

Dynasil reported net income for the quarter of $0.4 million or $0.02 per share compared with breakeven income or $0.00 per share for the quarter ended June 30, 2014. Optics segment revenues for the quarter ended June 30, 2015 increased to $5.6 million, an increase of $0.4 million or 9% compared to the same quarter in 2014. Contract Research segment revenues for the quarter ended June 30, 2015 were $4.6 million, a decrease of $0.8 million or 15% compared to the same quarter in the prior year.

“Our Optometrics, Hilger and EMF subsidiaries all continued to experience solid revenue growth” said Dynasil Chairman and CEO Peter Sulick, “and I anticipate continued growth in the Optics segment in the fourth quarter. Growth for both Optometrics and Hilger are the result of large customer contracts while EMF’s growth includes the DichroTec business, acquired in June, 2014. Our strategy of selective acquisitions complementary with our existing business, leveraging our contract research business for commercial opportunities and organic revenue growth across our optics businesses is reflected in our improved quarter.”

“Our Contract Research segment revenues have been steady for the first three quarters of fiscal 2015 after a contraction that began in last year’s second quarter in response to government fiscal constraint on R & D,” continued Mr. Sulick. “We have continued to prudently manage our costs and our backlog which stands at $35 million as of June 30, 2015. While forecasting is particularly difficult given the government funding constraints and uncertainty in future awards, I am optimistic that Contract Research segment revenues will increase modestly in the fourth quarter. You should also take note of our right sizing this business as circumstances dictate. The business is being managed by an experienced group of scientific and business professionals.”

“Overall, both our operating segments reported increased operating profits for the quarter compared to the prior year. However, we also consolidate the results of our 90% owned joint venture, Xcede, and while it continues to make progress with its tissue sealant technology, Xcede continues to incur approximately $250,000 of Research and Development expense each quarter which is included in our results. I believe the Xcede business, which continues to be funded by outside angel investors and certain members of Dynasil’s executive team and board of directors, represents a significant opportunity for Dynasil. On August 7, we converted the provisional patents filed last year on the improved Xcede patch, which were presented at our annual meeting to full utility patents. This filing is a major step toward protecting Xcede’s intellectual property as we continue down the path to potential commercialization. We remain very committed to the realization of value for this technology as one of the most exciting opportunities within Dynasil.”

Conference Call Information

Dynasil will host a conference call for investors and analysts at 5:00 p.m. ET today. The call will be hosted by Chairman, CEO and President Peter Sulick and Chief Financial Officer Thomas Leonard. Those who wish to listen to the conference call live can go to the event page or the Investor Information section of the Company’s website at www.dynasil.com. The call also may be accessed by dialing (888) 346-2613 or (412) 902-4252. For interested individuals unable to join the live conference call, a webcast replay will be available on the Company’s website for one year.

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 Newton, 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 press 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 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, uncertainty of the impact of the DichroTec acquisition, 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, 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 16, 2014, 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.

Dynasil Corporation of America and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	June 30, 2015			September 30, 2014
ASSETS
Current Assets
Cash and cash equivalents	$	3,478,000		$	3,842,000
Accounts receivable, net		3,362,000			3,240,000
Costs in excess of billings and unbilled receivables		1,271,000			1,235,000
Inventories, net of reserves		3,419,000			2,954,000
Prepaid expenses and other current assets		1,185,000			861,000
Total current assets		12,715,000			12,132,000
Property, Plant and Equipment, net		6,458,000			6,518,000
Other Assets
Intangibles, net		1,252,000			1,383,000
Goodwill		6,191,000			6,247,000
Deferred financing costs, net		29,000			39,000
Security and other deposits		238,000			58,000
Total other assets		7,710,000			7,727,000
Total Assets	$	26,883,000		$	26,377,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt	$	3,664,000		$	2,329,000
Capital lease obligations, current		103,000			134,000
Convertible notes		1,784,000			1,433,000
Accounts payable		1,493,000			1,602,000
Deferred revenue		130,000			103,000
Accrued expenses and other liabilities		2,855,000			2,503,000
Total current liabilities		10,029,000			8,104,000
Long-term Liabilities
Long-term debt, net of current portion		2,045,000			3,282,000
Capital lease obligations, net of current portion		52,000			95,000
Pension liability		-			318,000
Deferred tax liability		245,000			264,000
Other long-term liabilities		47,000			-
Total long-term liabilities		2,389,000			3,959,000
Stockholders' Equity
Dynasil stockholders' equity		14,609,000			14,383,000
Noncontrolling interest		(144,000	)		(69,000	)
Total stockholders' equity		14,465,000			14,314,000
Total Liabilities and Stockholders' Equity	$	26,883,000		$	26,377,000

Dynasil Corporation of America and Subsidiaries

Consolidated Statement of Operations and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Net revenue	$	10,239,000		$	10,641,000		$	29,745,000		$	31,758,000
Cost of revenue		6,021,000			6,771,000			18,260,000			19,161,000
Gross profit		4,218,000			3,870,000			11,485,000			12,597,000
Operating expenses:
Sales and marketing		312,000			337,000			986,000			1,047,000
Research and development		382,000			301,000			1,172,000			1,025,000
General and administrative		3,041,000			3,106,000			9,443,000			9,505,000
Gain on sale of assets		8,000			(30,000	)		(178,000	)		(1,217,000	)
Total operating expenses		3,743,000			3,714,000			11,423,000			10,360,000
Income from operations		475,000			156,000			62,000			2,237,000
Interest expense, net		124,000			146,000			372,000			567,000
Income (loss) before taxes		351,000			10,000			(310,000	)		1,670,000
Income tax provision (credit)		(14,000	)		(48,000	)		7,000			(87,000	)
Net income (loss)		365,000			58,000			(317,000	)		1,757,000
Less: Net loss attributable to noncontrolling interest		(23,000	)		(16,000	)		(75,000	)		(47,000	)
Net income (loss) attributable to common stockholders	$	388,000		$	74,000		$	(242,000	)	$	1,804,000
Net income (loss)	$	365,000		$	58,000		$	(317,000	)	$	1,757,000
Other comprehensive income (loss):
Decrease in pension liability		-			-			318,000			-
Foreign currency translation		251,000			142,000			(138,000	)		215,000
Total comprehensive income (loss)	$	616,000		$	200,000		$	(137,000	)	$	1,972,000
Basic net income (loss) per common share	$	0.02		$	0.00		$	(0.01	)	$	0.12
Diluted net income (loss) per common share	$	0.02		$	0.00		$	(0.01	)	$	0.12
Weighted average shares outstanding
Basic		16,439,637			15,280,607			16,368,313			15,134,377
Diluted		16,447,088			15,299,422			16,368,313			15,145,639

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Income Taxes (Details Textual)	3 Months Ended		6 Months Ended	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014
Income Tax [Line Items]
Effective Income Tax Rate Reconciliation, Percent	4.00%	480.00%		2.40%	5.20%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			34.00%

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Stock Based Compensation (Details 2) - 9 months ended Jun. 30, 2015 - $ / shares	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Nonvested, Beginning Balance	54,000
Shares, Granted	0
Shares, Vested	(27,000)
Shares, Cancelled	0
Shares, Nonvested, Ending Balance	27,000
Weighted-Average Grant-Date Fair Value, Nonvested, Beginning Balance	$ 1.04
Weighted-Average Grant-Date Fair Value, Granted	0
Weighted-Average Grant-Date Fair Value, Vested	1.04
Weighted-Average Grant-Date Fair Value, Cancelled	0
Weighted-Average Grant-Date Fair Value, Nonvested, Ending Balance	$ 1.04

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Inventories (Details) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Inventory Current [Line Items]
Raw Materials	$ 2,033,000	$ 1,805,000
Work-in-Process	983,000	858,000
Finished Goods	403,000	291,000
Inventory, Net, Total	$ 3,419,000	$ 2,954,000

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Segment, Customer and Geographical Reporting (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 10,239,000	$ 10,641,000	$ 29,745,000	$ 31,758,000
% of Total	100.00%	100.00%	100.00%	100.00%
United State [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 8,228,000	$ 8,255,000	$ 23,892,000	$ 25,784,000
% of Total	80.00%	78.00%	80.00%	81.00%
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 1,140,000	$ 689,000	$ 3,147,000	$ 2,363,000
% of Total	11.00%	6.00%	11.00%	8.00%
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 871,000	$ 1,697,000	$ 2,706,000	$ 3,611,000
% of Total	9.00%	16.00%	9.00%	11.00%

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Xcede Technologies, Inc. Joint Venture

9 Months Ended

Jun. 30, 2015

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 3 – Xcede Technologies, Inc. Joint Venture

In October, 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 has raised approximately $1.7 million in external funding in the form of Convertible Notes (the “Notes”) from outside investors and to certain officers and directors of the Company. The Notes accrue interest at 5% and, as amended, are due after June 30, 2016, upon the demand of the holders of a majority of the aggregate outstanding principal amount of the Notes.

Upon the closing of a capital stock financing raising at least $3.0 million, inclusive of the Notes and interest, the outstanding principal amount of the Notes plus all accrued interest will be converted into shares of the same capital stock sold in the financing at a 20% discount to the price per share of that capital stock. Alternatively, at any time prior to a capital stock financing the Note holders can convert, at their option, the principal amount of the Notes plus accrued interest into common stock based on a $5 million valuation.

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. In 2015, Xcede has recognized $21,000 of stock compensation expense related to options to purchase Xcede’s stock granted to its employees and directors.

The Company expects Xcede to require significant additional funding prior to commencing human trials.

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Earnings (Loss) Per Common Share (Details) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Weighted average shares outstanding
Basic	16,439,637	15,280,607	16,368,313	15,134,377
Effect of dilutive securities
Dilutive Average Shares Outstanding	16,447,088	15,299,422	16,368,313	15,145,639
Employee 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	7,451	18,815	0	11,262

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Intangible Assets (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 43,000	$ 44,000	$ 128,000	$ 133,000

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Earnings (Loss) Per Common Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Loss Per Common Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	58,212	630,532	58,212	630,532

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Stock Based Compensation (Details) - 9 months ended Jun. 30, 2015	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term in years	3 years
Risk-free interest rate	0.77%
Expected volatility	89.46%
Expected dividend yield	0.00%

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Acquisitions and Divestitures

9 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note 2 – Acquisitions and Divestitures

On June 26, 2014, the Company and its wholly owned subsidiary, Evaporated Metal Films Corp. (“EMF”) acquired substantially all the assets of DichroTec Thin Films, LLC (“DichroTec”), a manufacturer of optical thin film coatings. The total purchase price paid of $1.7 million, consisting of approximately $0.5 million in cash and 690,000 shares of Dynasil common stock, was allocated primarily to machinery and equipment. DichroTec reported unaudited revenues of approximately $1.9 million for the twelve months ended December 31, 2013. The Company sold its Lead Paint Detector and Gamma Medical Probe businesses in the first quarter of fiscal 2014. These businesses constituted substantially all the Company’s Instruments segment but did not qualify to be reported as discontinued operations. The businesses were sold for an aggregate of approximately $4.7 million, including the assumption of certain liabilities of the Company and a possible contingent payment and resulted in a gain of $1.2 million which is included in Income from Operations in the nine months ended June 30, 2014. The Company used $3.9 million of the proceeds from the two transactions to reduce its indebtedness to Santander Bank, N.A., its former lender.

In the three months ended December 31, 2014, the Company recorded a gain of $0.2 million in connection with the sale of a product line in its Optics segment.

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Stock Based Compensation (Details 1) - $ / shares	9 Months Ended	12 Months Ended
	Jun. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Balance,Options Outstanding	430,532
Outstanding and exercisable,Options Outstanding	58,212
Granted,Options Outstanding	36,232
Exercised,Options Outstanding	0
Cancelled, Options Outstanding	(408,552)
Balance,Options Outstanding	58,212	430,532
Balance,Weighted Average Exercise Price per Share	$ 3.33
Outstanding and exercisable,Weighted Average Exercise Price per Share	2.28
Granted,Weighted Average Exercise Price per Share	1.82
Exercised,Weighted Average Exercise Price per Share	0
Cancelled,Weighted Average Exercise Price per Share	3.99
Balance,Weighted Average Exercise Price per Share	$ 2.28	$ 3.33
Balance,Weighted Average Remain Contractual Term (in Years)	2 years 2 months 19 days	3 months 22 days
Granted,Weighted Average Remain Contractual Term (in Years)
Outstanding and exercisable,Weighted Average Remain Contractual Term (in Years)	2 years 2 months 19 days

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Settlement of Pension Liability (Details Textual)	1 Months Ended
	Dec. 31, 2014 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefits Paid	$ 688,000
Defined Benefit Plan, Settlements, Benefit Obligation	$ 332,000

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CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Current Assets
Cash and cash equivalents	$ 3,478,000	$ 3,842,000
Accounts receivable, net of allowances of $153,000 and $299,000 at June 30, 2015 and September 30, 2014, respectively	3,362,000	3,240,000
Costs in excess of billings and unbilled receivables	1,271,000	1,235,000
Inventories, net of reserves	3,419,000	2,954,000
Prepaid expenses and other current assets	1,185,000	861,000
Total current assets	12,715,000	12,132,000
Property, Plant and Equipment, net	6,458,000	6,518,000
Other Assets
Intangibles, net	1,252,000	1,383,000
Goodwill	6,191,000	6,247,000
Deferred financing costs, net	29,000	39,000
Security and other deposits	238,000	58,000
Total other assets	7,710,000	7,727,000
Total Assets	26,883,000	26,377,000
Current Liabilities
Current portion of long-term debt	3,664,000	2,329,000
Capital lease obligations, current	103,000	134,000
Convertible notes	1,784,000	1,433,000
Accounts payable	1,493,000	1,602,000
Deferred revenue	130,000	103,000
Accrued expenses and other liabilities	2,855,000	2,503,000
Total current liabilities	10,029,000	8,104,000
Long-term Liabilities
Long-term debt, net of current portion	2,045,000	3,282,000
Capital lease obligations, net of current portion	52,000	95,000
Pension liability	0	318,000
Deferred tax liability	245,000	264,000
Other long-term liabilities	47,000	0
Total long-term liabilities	2,389,000	3,959,000
Stockholders' Equity
Common Stock, $0.0005 par value, 40,000,000 shares authorized, 17,313,366 and 17,140,182 shares issued, 16,503,206 and and 16,330,022 shares outstanding at June 30, 2015 and September 30, 2014, respectively.	9,000	9,000
Additional paid in capital	19,483,000	19,195,000
Accumulated other comprehensive income	278,000	98,000
Accumulated deficit	(4,175,000)	(3,933,000)
Less 810,160 shares of treasury stock - at cost	(986,000)	(986,000)
Total Dynasil stockholders' equity	14,609,000	14,383,000
Noncontrolling interest	(144,000)	(69,000)
Total stockholders' equity	14,465,000	14,314,000
Total Liabilities and Stockholders' Equity	$ 26,883,000	$ 26,377,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ (317,000)	$ 1,757,000
Adjustments to reconcile net income (loss) to net cash:
Stock compensation expense	298,000	403,000
Foreign exchange loss (gain)	(14,000)	30,000
Gain on sale of assets	(178,000)	(1,217,000)
Depreciation and amortization	898,000	809,000
Pension expense	318,000	0
Other	110,000	80,000
Other changes in assets and libilities:
Accounts receivable, net	(122,000)	(70,000)
Inventories	(530,000)	(492,000)
Costs in excess of billings and unbilled receivables	(36,000)	69,000
Prepaid expenses and other assets	(489,000)	(111,000)
Accounts payable	(116,000)	185,000
Accrued expenses and other liabilities	14,000	65,000
Deferred revenue	27,000	(382,000)
Net cash from operating activities	(137,000)	1,126,000
Cash flows from investing activities:
Acquisitions	0	(500,000)
Proceeds from sale of assets	244,000	4,357,000
Purchases of property, plant and equipment	(747,000)	(879,000)
Net cash from investing activities	(503,000)	2,978,000
Cash flows from financing activities:
Proceeds from issuance of common stock	9,000	11,000
Net proceeds from issuance of convertible notes	298,000	810,000
Principal payments on capital leases	(110,000)	(96,000)
Proceeds from short and long-term debt	300,000	2,707,000
Payments on long-term debt	(202,000)	(6,841,000)
Net cash from financing activities	295,000	(3,409,000)
Effect of exchange rates on cash and cash equivalents	(19,000)	(47,000)
Net change in cash and cash equivalents	(364,000)	648,000
Cash and cash equivalents, beginning	3,842,000	2,437,000
Cash and cash equivalents, ending	3,478,000	3,085,000
Non cash activities:
Assets acquired	0	1,739,000
Less: common shares issued in acquisition as consideration	0	1,239,000
Cash paid in acquisition	0	500,000
Assets purchased under capital leases	73,000	0
Tax payments (refunds)	$ (8,000)	$ 0

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Stock Based Compensation (Details Textual) - Equity Award [Domain] - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Class of Stock [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 46,000		$ 46,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Allocated Share-based Compensation Expense	$ 120,000	$ 164,000	$ 277,000	$ 403,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			36,232
Share-based Compensation, Total			$ 298,000	$ 403,000
Equity Method Investment, Ownership Percentage	90.00%		90.00%
Xcede subsidiary [Member]
Class of Stock [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 98,000		$ 98,000
Share-based Compensation, Total	$ 7,000		$ 21,000
Equity Method Investment, Ownership Percentage	90.00%		90.00%
Director [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Intrinsic Value, Amount Per Share	$ 1.82
Allocated Share-based Compensation Expense	$ 25,000

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Segment, Customer and Geographical Reporting (Tables)

9 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

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

The Company’s segment information for the three months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Three Months Ended June 30,
2015
	Contract
	Research			Optics			Instruments		Biomedical		Total
Revenue	$	4,626,000		$	5,613,000		$	-	$	-	$	10,239,000
Gross Profit		2,027,000			2,191,000			-		-		4,218,000
GM %		43.8	%		39.0	%		-		-		41.2	%
SG&A		1,934,000			1,565,000			-		236,000		3,735,000
Loss on sale of assets		-			(8,000)			-		-		(8,000)
Operating Income (Loss)		93,000			618,000			-		(236,000)		475,000
Depreciation and Amortization		74,000			223,000			-		15,000		312,000
Capital expenditures		-			270,000			-		21,000		291,000
Intangibles, Net		273,000			722,000			-		257,000		1,252,000
Goodwill		4,939,000			1,252,000			-		-		6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000	$	756,000	$	26,883,000

Results of Operations for the Three Months Ended June 30,
2014
	Contract Research			Optics			Instruments		Biomedical			Total
Revenue	$	5,461,000		$	5,172,000		$	-	$	8,000		$	10,641,000
Gross Profit		2,121,000			1,741,000			-		8,000			3,870,000
GM %		38.8	%		33.7	%		-		100.0	%		36.4	%
SG&A		2,057,000			1,516,000			(10,000)		181,000			3,744,000
Gain on sale of assets		-			-			30,000		-			30,000
Operating Income (Loss)		64,000			225,000			40,000		(173,000)			156,000
Depreciation and Amortization		70,000			190,000			-		15,000			275,000
Capital expenditures		-			1,937,000			-		-			1,937,000
Intangibles, Net		307,000			893,000			-		133,000			1,333,000
Goodwill		4,939,000			1,394,000			-		-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000	$	632,000		$	26,471,000

The Company’s segment information for the nine months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Nine Months Ended June 30,
2015
	Contract
	Research			Optics			Instruments		Biomedical		Total
Revenue	$	13,964,000		$	15,781,000		$	-	$	-	$	29,745,000
Gross Profit		6,077,000			5,408,000			-		-		11,485,000
GM %		43.5	%		34.3	%		-		-		38.6	%
SG&A		5,712,000			5,150,000			-		739,000		11,601,000
Gain on sale of assets		-			178,000			-		-		178,000
Operating Income (Loss)		365,000			436,000			-		(739,000)		62,000
Depreciation and Amortization		222,000			631,000			-		45,000		898,000
Capital expenditures		4,000			666,000			-		77,000		747,000
Intangibles, Net		273,000			722,000			-		257,000		1,252,000
Goodwill		4,939,000			1,252,000			-		-		6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000	$	756,000	$	26,883,000

Results of Operations for the Nine Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	16,915,000		$	14,059,000		$	773,000		$	11,000		$	31,758,000
Gross Profit		7,093,000			5,175,000			318,000			11,000			12,597,000
GM %		41.9	%		36.8	%		41.1	%		100.0	%		39.7	%
SG&A		6,439,000			4,030,000			529,000			579,000			11,577,000
Gain on sale of assets		-			-			1,217,000			-			1,217,000
Operating Income (Loss)		654,000			1,145,000			1,006,000			(568,000)			2,237,000
Depreciation and Amortization		209,000			551,000			2,000			47,000			809,000
Capital expenditures		12,000			2,606,000			-			-			2,618,000
Intangibles, Net		307,000			893,000			-			133,000			1,333,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

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 June 30, 2015 and 2014 are as follows:

	Three Months Ended					Three Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,228,000		80	%	$	8,255,000		78	%
Europe		1,140,000		11	%		689,000		6	%
Other		871,000		9	%		1,697,000		16	%
	$	10,239,000		100	%	$	10,641,000		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the nine months ended June 30, 2015 and 2014 are as follows:

	Nine Months Ended					Nine Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	23,892,000		80	%	$	25,784,000		81	%
Europe		3,147,000		11	%		2,363,000		8	%
Other		2,706,000		9	%		3,611,000		11	%
	$	29,745,000		100	%	$	31,758,000		100	%

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Segment, Customer and Geographical Reporting (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2014
Segment Reporting Information [Line Items]
Revenue	$ 10,239,000	$ 10,641,000	$ 29,745,000	$ 31,758,000
Gross Profit	4,218,000	3,870,000	11,485,000	12,597,000
Gain (Loss) on sale of assets	(8,000)	30,000	178,000	1,217,000
Operating Income (Loss)	475,000	156,000	62,000	2,237,000
Depreciation and Amortization			898,000	809,000
Capital expenditures			747,000	879,000
Intangibles, Net	1,252,000		1,252,000		$ 1,383,000
Goodwill	6,191,000		6,191,000		6,247,000
Total Assets	26,883,000		26,883,000		$ 26,377,000
Results Of Operations For Three Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue	10,239,000	10,641,000
Gross Profit	$ 4,218,000	$ 3,870,000
GM %	41.20%	36.40%
SG&A	$ 3,735,000	$ 3,744,000
Gain (Loss) on sale of assets	(8,000)	30,000
Operating Income (Loss)	475,000	156,000
Depreciation and Amortization	312,000	275,000
Capital expenditures	291,000	1,937,000
Intangibles, Net	1,252,000	1,333,000	1,252,000	1,333,000
Goodwill	6,191,000	6,333,000	6,191,000	6,333,000
Total Assets	26,883,000	26,471,000	26,883,000	26,471,000
Results Of Operations For Nine Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue			29,745,000	31,758,000
Gross Profit			$ 11,485,000	$ 12,597,000
GM %			38.60%	39.70%
SG&A			$ 11,601,000	$ 11,577,000
Gain (Loss) on sale of assets			178,000	1,217,000
Operating Income (Loss)			62,000	2,237,000
Depreciation and Amortization			898,000	809,000
Capital expenditures			747,000	2,618,000
Intangibles, Net	1,252,000	1,333,000	1,252,000	1,333,000
Goodwill	6,191,000	6,333,000	6,191,000	6,333,000
Total Assets	26,883,000	26,471,000	26,883,000	26,471,000
Contract Research [Member] | Results Of Operations For Three Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue	4,626,000	5,461,000
Gross Profit	$ 2,027,000	$ 2,121,000
GM %	43.80%	38.80%
SG&A	$ 1,934,000	$ 2,057,000
Gain (Loss) on sale of assets	0	0
Operating Income (Loss)	93,000	64,000
Depreciation and Amortization	74,000	70,000
Capital expenditures	0	0
Intangibles, Net	273,000	307,000	273,000	307,000
Goodwill	4,939,000	4,939,000	4,939,000	4,939,000
Total Assets	9,462,000	9,451,000	9,462,000	9,451,000
Contract Research [Member] | Results Of Operations For Nine Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue			13,964,000	16,915,000
Gross Profit			$ 6,077,000	$ 7,093,000
GM %			43.50%	41.90%
SG&A			$ 5,712,000	$ 6,439,000
Gain (Loss) on sale of assets			0	0
Operating Income (Loss)			365,000	654,000
Depreciation and Amortization			222,000	209,000
Capital expenditures			4,000	12,000
Intangibles, Net	273,000	307,000	273,000	307,000
Goodwill	4,939,000	4,939,000	4,939,000	4,939,000
Total Assets	9,462,000	9,451,000	9,462,000	9,451,000
Optics [Member] | Results Of Operations For Three Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue	5,613,000	5,172,000
Gross Profit	$ 2,191,000	$ 1,741,000
GM %	39.00%	33.70%
SG&A	$ 1,565,000	$ 1,516,000
Gain (Loss) on sale of assets	(8,000)	0
Operating Income (Loss)	618,000	225,000
Depreciation and Amortization	223,000	190,000
Capital expenditures	270,000	1,937,000
Intangibles, Net	722,000	893,000	722,000	893,000
Goodwill	1,252,000	1,394,000	1,252,000	1,394,000
Total Assets	16,615,000	16,053,000	16,615,000	16,053,000
Optics [Member] | Results Of Operations For Nine Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue			15,781,000	14,059,000
Gross Profit			$ 5,408,000	$ 5,175,000
GM %			34.30%	36.80%
SG&A			$ 5,150,000	$ 4,030,000
Gain (Loss) on sale of assets			178,000	0
Operating Income (Loss)			436,000	1,145,000
Depreciation and Amortization			631,000	551,000
Capital expenditures			666,000	2,606,000
Intangibles, Net	722,000	893,000	722,000	893,000
Goodwill	1,252,000	1,394,000	1,252,000	1,394,000
Total Assets	16,615,000	16,053,000	16,615,000	16,053,000
Instruments [Member] | Results Of Operations For Three Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue	0	0
Gross Profit	$ 0	$ 0
GM %	0.00%	0.00%
SG&A	$ 0	$ (10,000)
Gain (Loss) on sale of assets	0	30,000
Operating Income (Loss)	0	40,000
Depreciation and Amortization	0	0
Capital expenditures	0	0
Intangibles, Net	0	0	0	0
Goodwill	0	0	0	0
Total Assets	50,000	335,000	50,000	335,000
Instruments [Member] | Results Of Operations For Nine Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue			0	773,000
Gross Profit			$ 0	$ 318,000
GM %			0.00%	41.10%
SG&A			$ 0	$ 529,000
Gain (Loss) on sale of assets			0	1,217,000
Operating Income (Loss)			0	1,006,000
Depreciation and Amortization			0	2,000
Capital expenditures			0	0
Intangibles, Net	0	0	0	0
Goodwill	0	0	0	0
Total Assets	50,000	335,000	50,000	335,000
Biomedical [Member] | Results Of Operations For Three Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue	0	8,000
Gross Profit	$ 0	$ 8,000
GM %	0.00%	100.00%
SG&A	$ 236,000	$ 181,000
Gain (Loss) on sale of assets	0	0
Operating Income (Loss)	(236,000)	(173,000)
Depreciation and Amortization	15,000	15,000
Capital expenditures	21,000	0
Intangibles, Net	257,000	133,000	257,000	133,000
Goodwill	0	0	0	0
Total Assets	756,000	632,000	756,000	632,000
Biomedical [Member] | Results Of Operations For Nine Months Ended Period [Member]
Segment Reporting Information [Line Items]
Revenue			0	11,000
Gross Profit			$ 0	$ 11,000
GM %			0.00%	100.00%
SG&A			$ 739,000	$ 579,000
Gain (Loss) on sale of assets			0	0
Operating Income (Loss)			(739,000)	(568,000)
Depreciation and Amortization			45,000	47,000
Capital expenditures			77,000	0
Intangibles, Net	257,000	133,000	257,000	133,000
Goodwill	0	0	0	0
Total Assets	$ 756,000	$ 632,000	$ 756,000	$ 632,000

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Xcede Technologies, Inc. Joint Venture (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Oct. 31, 2013	Jun. 30, 2015	Jun. 30, 2014
Schedule of Equity Method Investments [Line Items]
Proceeds from Convertible Debt	$ 1,700,000
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt Instrument, Convertible, Beneficial Conversion Feature		$ 3,000,000
Capital Stock Financing Discount Percentage		20.00%
Common Stock Valuation		$ 5,000,000
Equity Method Investment, Ownership Percentage		90.00%
Share-based Compensation, Total		$ 298,000	$ 403,000
Xcede [Member]
Schedule of Equity Method Investments [Line Items]
Share-based Compensation, Total		$ 21,000

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Basis of Presentation

9 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Note 1 - Basis of Presentation

The accompanying consolidated balance sheet as of June 30, 2015, the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended June 30, 2015 and 2014, changes in stockholders’ equity for the nine months ended June 30, 2015 and cash flows for the nine months ended June 30, 2015 and 2014 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 our 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, 2014 Annual Report on Form 10-K previously filed by the Company with the Securities and Exchange Commission.

The Company considers events or transactions that have occurred after the unaudited consolidated balance sheet date of June 30, 2015, 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 ($)	Jun. 30, 2015	Sep. 30, 2014
Allowance for doubtful accounts (in dollars)	$ 153,000	$ 299,000
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	17,313,366	17,140,182
Common stock, shares outstanding	16,503,206	16,330,022
Treasury stock, shares	810,160	810,160

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Settlement of Pension Liability

9 Months Ended

Jun. 30, 2015

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule Of Defined Benefit Plans Disclosure [Text Block]

Note 11 – Settlement of Pension Liability

On December 1, 2014, the Company terminated and settled its pension liability with each of the remaining participants in the EMF Defined Benefit Plan (the “Plan”). The Plan had been frozen since 2006. The total benefit payments made upon termination were $688,000 and the actual plan assets at the date of termination were $332,000. The Company funded and expensed the difference upon settlement of the Plan.

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Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2015	Aug. 06, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
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
Trading Symbol	DYSL
Entity Common Stock, Shares Outstanding		16,536,513

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Inventories (Tables)

9 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories, net of reserves, consists of the following:

	June 30,		September 30,
	2015		2014
Raw Materials	$	2,033,000	$	1,805,000
Work-in-Process		983,000		858,000
Finished Goods		403,000		291,000
	$	3,419,000	$	2,954,000

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net revenue	$ 10,239,000	$ 10,641,000	$ 29,745,000	$ 31,758,000
Cost of revenue	6,021,000	6,771,000	18,260,000	19,161,000
Gross profit	4,218,000	3,870,000	11,485,000	12,597,000
Operating expenses:
Sales and marketing	312,000	337,000	986,000	1,047,000
Research and development	382,000	301,000	1,172,000	1,025,000
General and administrative	3,041,000	3,106,000	9,443,000	9,505,000
Gain on sale of assets	8,000	(30,000)	(178,000)	(1,217,000)
Total operating expenses	3,743,000	3,714,000	11,423,000	10,360,000
Income from operations	475,000	156,000	62,000	2,237,000
Interest expense, net	124,000	146,000	372,000	567,000
Income (loss) before taxes	351,000	10,000	(310,000)	1,670,000
Income tax provision (credit)	(14,000)	(48,000)	7,000	(87,000)
Net income (loss)	365,000	58,000	(317,000)	1,757,000
Less: Net loss attributable to noncontrolling interest	(23,000)	(16,000)	(75,000)	(47,000)
Net income (loss) attributable to common stockholders	388,000	74,000	(242,000)	1,804,000
Net income (loss)	365,000	58,000	(317,000)	1,757,000
Other comprehensive income (loss):
Decrease in pension liability	0	0	318,000	0
Foreign currency translation	251,000	142,000	(138,000)	215,000
Total comprehensive income (loss)	$ 616,000	$ 200,000	$ (137,000)	$ 1,972,000
Basic net income (loss) per common share (in dollars per share)	$ 0.02	$ 0.00	$ (0.01)	$ 0.12
Diluted net income (loss) per common share (in dollars per share)	$ 0.02	$ 0.00	$ (0.01)	$ 0.12
Weighted average shares outstanding
Basic (in shares)	16,439,637	15,280,607	16,368,313	15,134,377
Diluted (in shares)	16,447,088	15,299,422	16,368,313	15,145,639

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Goodwill

9 Months Ended

Jun. 30, 2015

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 nine months ended June 30, 2015.

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Intangible Assets

9 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

Note 5 – Intangible Assets

Intangible assets at June 30, 2015 and September 30, 2014 consist of the following:

	Useful	Gross		Accumulated
June 30, 2015	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	851,000	$	458,000	$	393,000
Know How	15		512,000		239,000		273,000
Trade Names	Indefinite		329,000		-		329,000
Patents	20		182,000		-		182,000
Biomedical Technologies	5		260,000		185,000		75,000
		$	2,134,000	$	882,000	$	1,252,000
	Useful	Gross		Accumulated
September 30, 2014	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	877,000	$	409,000	$	468,000
Know How	15		512,000		213,000		299,000
Trade Names	Indefinite		339,000		-		339,000
Patents	20		159,000		-		159,000
Biomedical Technologies	5		260,000		142,000		118,000
		$	2,147,000	$	764,000	$	1,383,000

Amortization expense for the three months ended June 30, 2015 and 2014 was $43,000 and $44,000, respectively. Amortization expense for the nine months ended June 30, 2015 and 2014 was $128,000 and $133,000, respectively.

Estimated amortization expense for each of the next five fiscal years and thereafter is as follows:

	2015 (3 months)		2016		2017		2018		2019		Thereafter		Total
Acquired Customer Base	$	20,000	$	80,000	$	80,000	$	80,000	$	80,000	$	53,000	$	393,000
Know How		9,000		34,000		34,000		34,000		34,000		128,000		273,000
Patents		2,000		9,000		9,000		9,000		9,000		144,000		182,000
Biomedical Technologies		15,000		60,000		-		-		-		-		75,000
	$	46,000	$	183,000	$	123,000	$	123,000	$	123,000	$	325,000	$	923,000

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Acquisitions and Divestitures (Details Textual) - USD ($)	1 Months Ended		3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 31, 2014	Jun. 26, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross						$ 0	$ 500,000
Revenue, Net, Total			$ 10,239,000		$ 10,641,000	$ 29,745,000	31,758,000
Gain (Loss) on Disposition of Business				$ 200,000
Business Acquisition, Contingent Consideration, Gain Loss							500,000
Dichrotec [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross		$ 500,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		690,000
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned		$ 1,700,000
Revenue, Net, Total								$ 1,900,000
Dilon [Member]
Business Acquisition [Line Items]
Proceeds from Sales of Business, Affiliate and Productive Assets	$ 4,700,000
Proceeds from (Repayments of) Debt							3,900,000
Gain (Loss) on Disposition of Business							$ 500,000

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Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

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

Intangible assets at June 30, 2015 and September 30, 2014 consist of the following:

	Useful	Gross		Accumulated
June 30, 2015	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	851,000	$	458,000	$	393,000
Know How	15		512,000		239,000		273,000
Trade Names	Indefinite		329,000		-		329,000
Patents	20		182,000		-		182,000
Biomedical Technologies	5		260,000		185,000		75,000
		$	2,134,000	$	882,000	$	1,252,000
	Useful	Gross		Accumulated
September 30, 2014	Life (years)	Amount		Amortization		Net
Acquired Customer Base	5 to 15	$	877,000	$	409,000	$	468,000
Know How	15		512,000		213,000		299,000
Trade Names	Indefinite		339,000		-		339,000
Patents	20		159,000		-		159,000
Biomedical Technologies	5		260,000		142,000		118,000
		$	2,147,000	$	764,000	$	1,383,000

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

Estimated amortization expense for each of the next five fiscal years and thereafter is as follows:

	2015 (3 months)		2016		2017		2018		2019		Thereafter		Total
Acquired Customer Base	$	20,000	$	80,000	$	80,000	$	80,000	$	80,000	$	53,000	$	393,000
Know How		9,000		34,000		34,000		34,000		34,000		128,000		273,000
Patents		2,000		9,000		9,000		9,000		9,000		144,000		182,000
Biomedical Technologies		15,000		60,000		-		-		-		-		75,000
	$	46,000	$	183,000	$	123,000	$	123,000	$	123,000	$	325,000	$	923,000

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Segment, Customer and Geographical Reporting

9 Months Ended

Jun. 30, 2015

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”). Substantially all the operating assets of the Instruments segment were sold in the three months ended December 31, 2013.

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 Biomedical segment, through Xcede Technologies, Inc., a majority owned, joint venture, 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. The businesses comprising substantially all the Instruments segment were sold in the first quarter of fiscal 2014 as discussed in Note 2.

The Company’s segment information for the three months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Three Months Ended June 30,
2015
	Contract
	Research			Optics			Instruments		Biomedical		Total
Revenue	$	4,626,000		$	5,613,000		$	-	$	-	$	10,239,000
Gross Profit		2,027,000			2,191,000			-		-		4,218,000
GM %		43.8	%		39.0	%		-		-		41.2	%
SG&A		1,934,000			1,565,000			-		236,000		3,735,000
Loss on sale of assets		-			(8,000)			-		-		(8,000)
Operating Income (Loss)		93,000			618,000			-		(236,000)		475,000
Depreciation and Amortization		74,000			223,000			-		15,000		312,000
Capital expenditures		-			270,000			-		21,000		291,000
Intangibles, Net		273,000			722,000			-		257,000		1,252,000
Goodwill		4,939,000			1,252,000			-		-		6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000	$	756,000	$	26,883,000

Results of Operations for the Three Months Ended June 30,
2014
	Contract Research			Optics			Instruments		Biomedical			Total
Revenue	$	5,461,000		$	5,172,000		$	-	$	8,000		$	10,641,000
Gross Profit		2,121,000			1,741,000			-		8,000			3,870,000
GM %		38.8	%		33.7	%		-		100.0	%		36.4	%
SG&A		2,057,000			1,516,000			(10,000)		181,000			3,744,000
Gain on sale of assets		-			-			30,000		-			30,000
Operating Income (Loss)		64,000			225,000			40,000		(173,000)			156,000
Depreciation and Amortization		70,000			190,000			-		15,000			275,000
Capital expenditures		-			1,937,000			-		-			1,937,000
Intangibles, Net		307,000			893,000			-		133,000			1,333,000
Goodwill		4,939,000			1,394,000			-		-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000	$	632,000		$	26,471,000

The Company’s segment information for the nine months ended June 30, 2015 and 2014 is summarized below:

Results of Operations for the Nine Months Ended June 30,
2015
	Contract
	Research			Optics			Instruments		Biomedical		Total
Revenue	$	13,964,000		$	15,781,000		$	-	$	-	$	29,745,000
Gross Profit		6,077,000			5,408,000			-		-		11,485,000
GM %		43.5	%		34.3	%		-		-		38.6	%
SG&A		5,712,000			5,150,000			-		739,000		11,601,000
Gain on sale of assets		-			178,000			-		-		178,000
Operating Income (Loss)		365,000			436,000			-		(739,000)		62,000
Depreciation and Amortization		222,000			631,000			-		45,000		898,000
Capital expenditures		4,000			666,000			-		77,000		747,000
Intangibles, Net		273,000			722,000			-		257,000		1,252,000
Goodwill		4,939,000			1,252,000			-		-		6,191,000
Total Assets	$	9,462,000		$	16,615,000		$	50,000	$	756,000	$	26,883,000

Results of Operations for the Nine Months Ended June 30,
2014
	Contract Research			Optics			Instruments			Biomedical			Total
Revenue	$	16,915,000		$	14,059,000		$	773,000		$	11,000		$	31,758,000
Gross Profit		7,093,000			5,175,000			318,000			11,000			12,597,000
GM %		41.9	%		36.8	%		41.1	%		100.0	%		39.7	%
SG&A		6,439,000			4,030,000			529,000			579,000			11,577,000
Gain on sale of assets		-			-			1,217,000			-			1,217,000
Operating Income (Loss)		654,000			1,145,000			1,006,000			(568,000)			2,237,000
Depreciation and Amortization		209,000			551,000			2,000			47,000			809,000
Capital expenditures		12,000			2,606,000			-			-			2,618,000
Intangibles, Net		307,000			893,000			-			133,000			1,333,000
Goodwill		4,939,000			1,394,000			-			-			6,333,000
Total Assets	$	9,451,000		$	16,053,000		$	335,000		$	632,000		$	26,471,000

Customer Financial Information

For the three and nine months ended June 30, 2015, four customers of the Contract Research segment, all various agencies of the U.S. Government, each represented more than 10% of the total segment revenue. For the three and nine months ended June 30, 2014, three customers, all various agencies of the U.S. Government, each represented more than 10% of the total segment revenue. For the three months ended June 30, 2015 and 2014, these customers made up 64% and 68%, respectively, of Contract Research revenue. For the nine months ended June 30, 2015 and 2014, these customers made up 68% and 67%, respectively, of Contract Research revenue.

For the three months ended June 30, 2015, two customers in the Optics segment each represented more than 10% of the total segment revenue. For the nine months ended June 30, 2015, no customer made up more than 10% of the segment revenue. For the three and nine months ended June 30, 2014, a single customer in the Optics segment made up 18% and 10%, respectively 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 June 30, 2015 and 2014 are as follows:

	Three Months Ended					Three Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	8,228,000		80	%	$	8,255,000		78	%
Europe		1,140,000		11	%		689,000		6	%
Other		871,000		9	%		1,697,000		16	%
	$	10,239,000		100	%	$	10,641,000		100	%

Revenue by geographic location in total and as a percentage of total revenue, for the nine months ended June 30, 2015 and 2014 are as follows:

	Nine Months Ended					Nine Months Ended
	June 30, 2015					June 30, 2014
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	23,892,000		80	%	$	25,784,000		81	%
Europe		3,147,000		11	%		2,363,000		8	%
Other		2,706,000		9	%		3,611,000		11	%
	$	29,745,000		100	%	$	31,758,000		100	%

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Earnings (Loss) Per Common Share

9 Months Ended

Jun. 30, 2015

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 nine months ended June 30, 2015 and 2014, no common stock options were included in the calculation of dilutive shares as all of the 58,212 and 630,532 common stock options outstanding, respectively, had exercise prices above the current quarterly average market price per share and their inclusion would be anti-dilutive. Additionally, for the nine months ended June 30, 2015, 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 be anti-dilutive.

The computation of the weighted shares outstanding for the three months ended June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,439,637		15,280,607
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		7,451		18,815
Dilutive Average Shares Outstanding		16,447,088		15,299,422

The computation of the weighted shares outstanding for the nine months ended June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,368,313		15,134,377
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		-		11,262
Dilutive Average Shares Outstanding		16,368,313		15,145,639

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Stock Based Compensation

9 Months Ended

Jun. 30, 2015

Stockholders Equity Note [Abstract]

Stockholders Equity Note Disclosure [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. The weighted average assumptions for the stock option grant during the nine months ended June 30, 2015 used in the Black-Scholes option pricing model were as follows:

	Nine Months Ended
	June 30, 2015
Expected term in years		3 years
Risk-free interest rate		0.77	%
Expected volatility		89.46	%
Expected dividend yield		0.00	%

The expected volatility was determined with reference to the historical volatility of the Company's stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that the options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant. The dividend yield is expected to be 0.00% because historically the Company has not paid dividends on common stock.

During the three months ended June 30, 2015, no stock options were granted. During the nine months ended June 30, 2015, 36,232 stock options were granted at the exercise price of $1.82 per share. These options were granted as a component of Directors’ Compensation for the twelve months ending January 31, 2016 and were fully exercisable when granted, and expire three years from the grant date. The stock-based compensation expense of $25,000 will be recognized over the requisite service period.

A summary of stock option activity for the nine months ended June 30, 2015 is presented below:

			Weighted Average		Weighted Average
	Options		Exercise Price per		Remain Contractual
	Outstanding		Share		Term (in Years)
Balance at September 30, 2014		430,532	$	3.33		0.31
Granted		36,232		1.82
Exercised		-		-
Cancelled		(408,552)		3.99
Balance at June 30, 2015		58,212	$	2.28		2.22
Outstanding and exercisable at June 30, 2015		58,212	$	2.28		2.22

A summary of restricted stock activity for the nine months ended June 30, 2015 is presented below:

Restricted Stock Activity for the Nine			Weighted-Average
Months ended June 30, 2015	Shares		Grant-Date Fair Value
Nonvested at September 30, 2014		54,000	$	1.04
Granted		-		-
Vested		(27,000)	$	1.04
Cancelled		-		-
Nonvested at June 30, 2015		27,000	$	1.04

Stock Compensation Expense for the three and nine months ended June 30, 2015 and 2014 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	106,000	$	112,000
Restricted Stock Grants		7,000		51,000
Option Grants		6,000		-
Employee Stock Purchase Plan		1,000		1,000
Total	$	120,000	$	164,000
	Nine Months Ended		Nine Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	243,000	$	213,000
Restricted Stock Grants		21,000		188,000
Option Grants		10,000		-
Employee Stock Purchase Plan		3,000		2,000
Total	$	277,000	$	403,000

At June 30, 2015 there was approximately $46,000 in unrecognized stock compensation cost, which is expected to be recognized over a weighted average period of two months.

In addition to the above stock compensation expense, the Company’s 90%-owned Xcede subsidiary issued options for its common stock to certain employees and directors that resulted in approximately $7,000 and $21,000 of stock compensation expense in the three and nine months ended June 30, 2015. At June 30, 2015 there was approximately $98,000 in unrecognized Xcede stock compensation cost.

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Income Taxes

9 Months Ended

Jun. 30, 2015

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 June 30, 2015 and September 30, 2014, 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 June 30, 2015 and September 30, 2014, 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 (4.0%) and (2.4%) for the three and nine months ended June 30, 2015, respectively, and (480.0%) and (5.2%) for the three and nine months ended June 30, 2014, 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 3) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Compensation Expense	$ 120,000	$ 164,000	$ 277,000	$ 403,000
Stock Grants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Compensation Expense	106,000	112,000	243,000	213,000
Resticted Stock Grants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Compensation Expense	7,000	51,000	21,000	188,000
Option Grants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Compensation Expense	6,000	0	10,000	0
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Compensation Expense	$ 1,000	$ 1,000	$ 3,000	$ 2,000

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Stock Based Compensation (Tables)

9 Months Ended

Jun. 30, 2015

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

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The weighted average assumptions for the stock option grant during the nine months ended June 30, 2015 used in the Black-Scholes option pricing model were as follows:

	Nine Months Ended
	June 30, 2015
Expected term in years		3 years
Risk-free interest rate		0.77	%
Expected volatility		89.46	%
Expected dividend yield		0.00	%

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

A summary of stock option activity for the nine months ended June 30, 2015 is presented below:

			Weighted Average		Weighted Average
	Options		Exercise Price per		Remain Contractual
	Outstanding		Share		Term (in Years)
Balance at September 30, 2014		430,532	$	3.33		0.31
Granted		36,232		1.82
Exercised		-		-
Cancelled		(408,552)		3.99
Balance at June 30, 2015		58,212	$	2.28		2.22
Outstanding and exercisable at June 30, 2015		58,212	$	2.28		2.22

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

A summary of restricted stock activity for the nine months ended June 30, 2015 is presented below:

Restricted Stock Activity for the Nine			Weighted-Average
Months ended June 30, 2015	Shares		Grant-Date Fair Value
Nonvested at September 30, 2014		54,000	$	1.04
Granted		-		-
Vested		(27,000)	$	1.04
Cancelled		-		-
Nonvested at June 30, 2015		27,000	$	1.04

Schedule Of Stock Compensation Expense [Table Text Block]

Stock Compensation Expense for the three and nine months ended June 30, 2015 and 2014 is as follows:

	Three Months Ended		Three Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	106,000	$	112,000
Restricted Stock Grants		7,000		51,000
Option Grants		6,000		-
Employee Stock Purchase Plan		1,000		1,000
Total	$	120,000	$	164,000
	Nine Months Ended		Nine Months Ended
Stock Compensation Expense	June 30, 2015		June 30, 2014
Stock Grants	$	243,000	$	213,000
Restricted Stock Grants		21,000		188,000
Option Grants		10,000		-
Employee Stock Purchase Plan		3,000		2,000
Total	$	277,000	$	403,000

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Intangible Assets (Details) - USD ($)	9 Months Ended	12 Months Ended
	Jun. 30, 2015	Sep. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 2,134,000	$ 2,147,000
Accumulated Amortization	882,000	764,000
Net	1,252,000	1,383,000
Acquired Customer Base [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Amount	851,000	877,000
Accumulated Amortization	458,000	409,000
Net	$ 393,000	$ 468,000
Acquired Customer Base [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)	5 years	5 years
Acquired Customer Base [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)	15 years	15 years
Know How [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)	15 years	15 years
Gross Amount	$ 512,000	$ 512,000
Accumulated Amortization	239,000	213,000
Net	273,000	299,000
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Amount	329,000	339,000
Accumulated Amortization	0	0
Net	$ 329,000	$ 339,000
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)	20 years	20 years
Gross Amount	$ 182,000	$ 159,000
Accumulated Amortization	0	0
Net	$ 182,000	$ 159,000
Biomedical Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (years)	5 years	5 years
Gross Amount	$ 260,000	$ 260,000
Accumulated Amortization	185,000	142,000
Net	$ 75,000	$ 118,000

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Jun. 30, 2015 - 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, 2014	$ 14,314,000	$ 9,000	$ 19,195,000	$ 98,000	$ (3,933,000)	$ (986,000)	$ (69,000)
Balance (in shares) at Sep. 30, 2014		17,140,182				810,160
Issuance of shares of common stock under employee stock purchase plan	9,000	$ 0	9,000	0	0	$ 0	0
Issuance of shares of common stock under employee stock purchase plan (in shares)		7,633				0
Stock-based compensation costs	296,000	$ 0	296,000	0	0	$ 0	0
Stock-based compensation costs (in shares)		175,193				0
Adjustment for escrow settlement	(17,000)	$ 0	(17,000)	0	0	$ 0	0
Adjustment for escrow settlement (in shares)		(9,642)				0
Settlement of pension obligation, net of tax	318,000	$ 0	0	318,000	0	$ 0	0
Foreign currency translation adjustment	(138,000)	0	0	(138,000)	0	0	0
Net loss	(317,000)	0	0	0	(242,000)	0	(75,000)
Balance at Jun. 30, 2015	$ 14,465,000	$ 9,000	$ 19,483,000	$ 278,000	$ (4,175,000)	$ (986,000)	$ (144,000)
Balance (in shares) at Jun. 30, 2015		17,313,366				810,160

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Inventories

9 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 4 - Inventories

Inventories, net of reserves, consists of the following:

	June 30,		September 30,
	2015		2014
Raw Materials	$	2,033,000	$	1,805,000
Work-in-Process		983,000		858,000
Finished Goods		403,000		291,000
	$	3,419,000	$	2,954,000

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Intangible Assets (Details 1)	Jun. 30, 2015 USD ($)
Finite-Lived Intangible Assets [Line Items]
2015 (3 months)	$ 46,000
2016	183,000
2017	123,000
2018	123,000
2019	123,000
Thereafter	325,000
Total	923,000
Acquired Customer Base [Member]
Finite-Lived Intangible Assets [Line Items]
2015 (3 months)	20,000
2016	80,000
2017	80,000
2018	80,000
2019	80,000
Thereafter	53,000
Total	393,000
Know How [Member]
Finite-Lived Intangible Assets [Line Items]
2015 (3 months)	9,000
2016	34,000
2017	34,000
2018	34,000
2019	34,000
Thereafter	128,000
Total	273,000
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
2015 (3 months)	2,000
2016	9,000
2017	9,000
2018	9,000
2019	9,000
Thereafter	144,000
Total	182,000
Biomedical Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
2015 (3 months)	15,000
2016	60,000
2017	0
2018	0
2019	0
Thereafter	0
Total	$ 75,000

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Segment, Customer and Geographical Reporting (Details Textual)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
One Customer [Member] | Optics [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage		18.00%		10.00%
Three Customers [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage		10.00%		10.00%
Sales Revenue, Segment [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage	64.00%	68.00%	68.00%	67.00%
Sales Revenue, Segment [Member] | Customer Two [Member] | US Government [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage		10.00%
Sales Revenue, Segment [Member] | Four Customers [Member] | US Government [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage	10.00%		10.00%
Sales Revenue, Segment [Member] | Two Customers [Member] | Optics [Member]
Segment Reporting Information [Line Items]
Concentration Risk, Percentage	10.00%

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Earnings (Loss) Per Common Share (Tables)

9 Months Ended

Jun. 30, 2015

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 June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,439,637		15,280,607
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		7,451		18,815
Dilutive Average Shares Outstanding		16,447,088		15,299,422

The computation of the weighted shares outstanding for the nine months ended June 30, 2015 and 2014 is as follows:

	June 30, 2015		June 30, 2014
Weighted average shares outstanding
Basic		16,368,313		15,134,377
Effect of dilutive securities
Stock Options		-		-
Restricted Stock		-		11,262
Dilutive Average Shares Outstanding		16,368,313		15,145,639