-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvFcXiwRTCHtAK9ADRUnEwR+LB03rmSG9Jkk3KWADkjs/usWnA5xhvMs0AX23bvG HbftBPq7xi9nzeghsLay3g== 0001260415-06-000032.txt : 20060809 0001260415-06-000032.hdr.sgml : 20060809 20060808190350 ACCESSION NUMBER: 0001260415-06-000032 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060809 DATE AS OF CHANGE: 20060808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNASIL CORP OF AMERICA CENTRAL INDEX KEY: 0000030831 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 221734088 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27503 FILM NUMBER: 061014596 BUSINESS ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08091 BUSINESS PHONE: 8567674600 MAIL ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08091 10QSB 1 dyn0606-10qsb.txt DYNASIL CORPORATION OF AMERICA FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006 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 small business issuer as specified in its charter) New Jersey 22-1734088 -------------- ------------------------------- (State or other jurisdiction (IRS Employer Identification No.) of incorporation) 385 Cooper Road, West Berlin, New Jersey, 08091 ---------------------------------------------------------- (Address of principal executive offices) (856) 767-4600 -------------------------------------------------- (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 XX No ---- ---- The Company had 3,848,145 shares of common stock, par value $.0005 per share, outstanding as of July 29, 2006. 1 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, 2006 AND SEPTEMBER 30, 2005 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2006 AND 2005 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2006 AND 2005 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 7 ITEM 3. CONTROLS AND PROCEDURES 11 PART II. OTHER INFORMATION 11 ITEM 1. LEGAL PROCEEDINGS 11 ITEM 2. CHANGES IN SECURITIES 11 ITEM 3. DEFAULTS ON SENIOR SECURITIES 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12 ITEM 5. OTHER INFORMATION 12 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 12 2 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30 September 30 2006 2005 ---------- ---------- Current assets Cash and cash equivalents $ 297,286 $ 308,210 Accounts receivable 887,791 877,375 Inventory 1,140,466 842,149 Deferred tax asset 24,250 24,250 Prepaid expenses and other assets 96,915 100,298 ---------- ---------- Total current assets 2,446,708 2,152,282 Property, Plant and Equipment, net 655,077 744,764 Other Assets 76,665 87,735 ---------- ---------- Total Assets $3,178,450 $2,984,781 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Note payable to bank- Line of credit $190,000 $250,000 Current portion - long term debt 73,806 184,403 Accounts payable 387,078 322,094 Accrued expenses 277,201 232,476 ---------- ---------- Total current liabilities 928,085 988,973 Long-term Debt, net 611,474 592,712 Stockholders' Equity Common Stock, $.0005 par value, 25,000,000 shares authorized, 4,658,305 and 4,566,946 shares issued, 3,848,145 and 3,756,786 shares outstanding 2,329 2,283 Preferred Stock, $.001 par value per share, 10,000,000 700 700 Shares authorized, Series A 10% cumulative, convertible 700,000 shares authorized, issued and outstanding Additional paid in capital 2,083,988 2,042,635 Retained earnings 538,216 343,820 ---------- ---------- 2,625,233 2,389,438 Less 810,160 shares in treasury - at cost (986,342) (986,342) ---------- ---------- Total stockholders' equity 1,638,891 1,403,096 ---------- ---------- Total Liabilities and Stockholders' Equity $3,178,450 $2,984,781 ========== ==========
3 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 ---------- --------- ---------- ---------- Sales $1,833,869 $1,619,128 $5,047,405 $3,497,340 Cost of Sales 1,164,997 1,103,318 3,307,189 2,500,119 ---------- --------- ---------- ---------- Gross profit 668,872 515,810 1,740,216 997,221 Selling, general and administrative 501,159 434,966 1,414,458 877,540 ---------- --------- ---------- ---------- Income from Operations 167,713 80,844 325,758 119,681 Interest expense - net (21,638) (20,610) (60,882) (39,572) ---------- --------- ---------- ---------- Income before Income Taxes 146,075 60,234 264,876 80,109 Income Tax 6,484 4,100 17,980 5,224 ---------- --------- ---------- ---------- Net income $139,591 $56,134 $246,896 $74,885 ========== ========= ========== ========== Net income per share Basic $0.03 $0.01 $0.05 $0.02 Diluted $0.02 $0.01 $0.04 $0.02 Weighted average shares outstanding 3,848,141 3,748,313 3,821,154 3,552,359
4 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended June 30 2006 2005 ---------- ----------- Cash flows from operating activities: Net income $ 246,896 $ 74,885 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 153,000 126,610 Amortization expense 19,640 5,606 Gain on disposal of assets (2,000) -0- Allowance for doubtful accounts 13,632 (10,547) (Increase) decrease in: Accounts receivable (24,049) (103,043) Inventories (298,317) (68,616) Prepaid expenses and other current assets 3,383 (16,891) Increase (decrease) in: Accounts payable 101,267 73,302 Accrued expenses 8,442 (32,705) ---------- ----------- Net cash provided by operating activities 221,894 48,601 ---------- ----------- Cash flows from investing activities: Acquisition of property, plant and equipment (71,883) (49,108) Proceeds from sale of assets 2,000 -0- Cash paid for acquisition of Optometrics LLC assets -0- (700,000) Cash for Optometrics acquisition costs -0- (67,976) ---------- ----------- Net cash used in investing activities (69,883) (817,084) ---------- ----------- Cash flows from financing activities: Issuance of common stock 41,400 35,538 Issuance of preferred stock -0- 690,000 Payments on long-term debt (94,847) (106,451) Proceeds from refinanced long-term debt 457 -0- Proceeds from short-term debt - Optometrics Acquisition -0- 102,143 Proceeds from long-term debt - Optometrics Acquisition -0- 183,106 Payments on short-term debt (57,445) -0- Preferred stock dividends paid (52,500) (21,910) Deferred financing costs incurred - Optometrics Acquisition -0- (17,273) ---------- ----------- Net cash provided by (used in) financing activities (162,935) 865,153 ---------- ----------- Net increase (decrease) in cash (10,924) 96,670 Cash - beginning of period 308,210 254,908 ---------- ----------- Cash - end of period $ 297,286 $ 351,578 ========== =========== Supplemental disclosure of cash flow information: Reconciliation of debt refinancing activities: Proceeds of new loans for New Jersey operations 449,346 -0- Repayment of old New Jersey term loan (448,889) -0- ---------- ----------- Net proceeds of refinancing activity $ 457 $ -0-
5 DYNASIL CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 - Basis of Presentation The consolidated balance sheet as of September 30, 2005 was audited and appears in the Form 10-KSB previously filed by the Company. The consolidated balance sheet as of June 30, 2006 and the consolidated statements of operations and cash flows for the three months and nine months ended June 30, 2006 and 2005, and the related information contained in these notes have been prepared by management without audit. In the opinion of management, all adjustments (which include only normal recurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles as of June 30, 2006 and for all periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year. On March 8, 2005, Dynasil Corporation of America acquired the operating assets and assumed certain liabilities of Optometrics LLC, a worldwide supplier of optical components. The assets acquired from Optometrics LLC are operated under the Optometrics Corporation name. Dynasil financial statements include the Optometrics Corporation results of operations since March 9, 2005. 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. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2005 Annual Report on Form 10-KSB previously filed by the Company with the Securities and Exchange Commission. Note 2 - Inventories Inventories are stated at the lower of average cost or market. Cost is determined using the first-in, first-out (FIFO) method. Inventories consist primarily of raw materials, work-in- process and finished goods. The Company evaluates inventory levels and expected usage on a periodic basis and records adjustments for impairments as required. Inventories consisted of the following: June 30, 2006 September 30, 2005 ----------------- ------------------ Raw Materials $573,231 $322,902 Work-in-Process 265,725 246,921 Finished Goods 301,510 272,326 --------- ------- $1,140,466 $842,149 ========= ======= Note 3 - Net Income Per Share Basic net income per share is computed using the weighted average number of common shares outstanding. The dilutive effects of potential common shares outstanding are included in diluted net earnings per share. 6 Note 4 - Stock Based Compensation The Company has adopted the disclosure provisions of SFAS No. 148 and continues to account for stock-based compensation using the intrinsic value method. Accordingly, no compensation cost has been recognized in the financial statements for stock options issued to employees since the options were granted at the most recent market price or higher on the date of grant. Stock options granted to consultants and other non-employees are reported at fair value in accordance with SFAS No. 123. The pro forma disclosures of net loss and net loss per common share required by SFAS No. 123 are shown below. Nine months ended June 30, 2006 June 30, 2005 ------------- ------------- Net income, as reported $246,896 $74,885 Add: Stock-based employee compensation expense included in reported net income -0- -0- Less: Total stock-based employee compensation expense determined under fair value based method for all options (4,636) (22,365) ------------- ------------- Pro forma net profit (loss) $ 242,260 $ 52,520 ============= ============= Actual net profit (loss) per common share $ 0.05 $ 0.02 Pro forma net profit (loss) per common share $ 0.05 $ 0.01 During the nine months ended June 30, 2006, 130,000 stock options were granted at prices ranging from $0.85 to $1.50 per share and 80,000 options were exercised. The 80,000 options had an exercise price of $0.40 per share with $23,857 paid in cash and $8,143 relating to Mr. Dunham's 2005 fiscal year bonus. During the nine months ended June 30, 2005, 436,459 options were granted at prices ranging from $0.40 to $0.65 and no options were exercised. The Company cancelled 275,000 and 45,000 options during the nine months ended June 30, 2006 and 2005, respectively. Compensation expenses relating to non-employee stock options granted during the nine months ended June 30, 2006 and 2005 were $-0-. During the nine months ended June 30, 2006, the Company issued a total of 10,771 shares of common stock valued at $0.71 to $0.80 per share to a Director in satisfaction of accrued 2005 Directors Fees and as a signing bonus for the Vice President of Sales position for a combined expense of $9,000. During the nine months ended June 30, 2005, the Company issued 158,360 shares of common stock valued at $0.14 to $0.66 per share to the Board of Directors in satisfaction of accrued and 2005 Directors' fee obligations totaling $28,717. ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Overview This is the fifth full quarter of results after Dynasil Corporation of America ("Dynasil" or the "Company") acquired, on March 8, 2005, the operating assets and assumed certain liabilities of Optometrics LLC, a worldwide supplier of optical components including diffraction gratings, lenses, thin film filters, laser optics, monochromators and specialized optical systems. The assets acquired from Optometrics LLC are 7 being operated under the Optometrics Corporation ("Optometrics") name. The Dynasil financial statements include the Optometrics results of operations for the period from March 9, 2005 through June 30, 2006. The results from time periods previous to March 9, 2005 do not include Optometrics' results. Integration of Optometrics with Dynasil is essentially completed and Optometrics is having a major positive impact on the Company. Revenues for the 3rd quarter ended June 30, 2006 were $1,833,869, an increase of 13.3% over revenues of $1,619,128 for the quarter ended June 30, 2005. Revenues for the nine months ended June 30, 2006 were $5,047,405, an increase of 44.3% over revenues of $3,497,340 for the nine months ended June 30, 2005. The net profit for the quarter ended June 30, 2006 was $139,591 or $0.03 per share, compared with a net profit of $56,134, or $0.01 per share, for the quarter ended June 30, 2005. Strong revenues in both business units and improved gross margins on optical materials were the primary drivers for revenue and profitability increases for the quarter ended June 30, 2006. The Company continues to focus on management's strategy of profitable growth from its optical components business and by pursuing acquisitions and strategic alliances. On July 11, 2006, the Company filed an 8-K report regarding the signing of a letter of intent to acquire another optical manufacturing company located in the Eastern United States. Consummation of the transaction is contingent upon several important and necessary conditions that may or may not be met, including completion of due diligence, obtaining required financing from outside sources on acceptable terms, and negotiation, execution and performance of a definitive acquisition agreement and related other agreements and documents. The proposed acquisition candidate supplies optical components, products and services to markets related to those currently served by Dynasil and Optometrics. Dynasil expects that, if consummated, the acquisition will close at or before the end of its current fiscal year on September 30, 2006. Results of Operations Revenues for the three months ended June 30, 2006 were $1,833,869, an increase of 13.3% over revenues of $1,619,128 for the three months ended June 30, 2005. The revenue increase came from organic growth in both optical components and optical materials. Revenues for the nine months ended June 30, 2006 were $5,047,405, an increase of 44.3% over revenues of $3,497,340 for the nine months ended June 30, 2005. The addition of Optometrics was the largest factor in the year to date revenue increase. Cost of sales for the three months ended June 30, 2006 was $1,164,997 or 63.5% of sales, a decrease of 4.6 percentage points from the three months ended June 30, 2005 of $1,103,318, or 68.1% of sales. Cost of sales for the nine months ended June 30, 2006 was $3,307,189 or 65.5% of sales, a decrease of 6.0 percentage points from the nine months ended June 30, 2005 of $2,500,119, or 71.5% of sales. The significant decrease in cost of sales as a percentage of sales resulted from the higher margin products sold by Optometrics as well as improved optical materials profitability. The Company also continues to implement cost reductions such as manufacturing yield improvements. Gross profit for the three months ended June 30, 2006 was $668,872, or 36.5% of sales, an increase of $153,062 over the three months ended June 30, 2005 of $515,810, or 31.9% of sales. Gross profit for the nine months ended June 30, 2006 was $1,740,216, or 34.4% of sales, an increase of $742,995 over the nine months ended June 30, 2005 of $997,221, or 28.5% of sales. Selling, general and administrative ("SG&A") expenses for the three months ended June 30, 2006 were $501,159 or 27.3% of sales, an increase of 0.4 percentage points over the three months ended June 30, 2005 of $434,966, or 26.9% of sales. SG&A expenses for the nine months ended June 30, 2006 were $1,414,458 or 28.0% of sales, an increase of 2.9 percentage points over the nine months ended June 30, 2005 of $877,540, or 25.1% of sales. The nine month increase in SG&A expenses and percentage resulted primarily from the impact of Optometrics SG&A expenses. 8 Net interest expense for the three months ended June 30, 2006 was $21,638, an increase of $1,028 over the three months ended June 30, 2005 of $20,610. Net interest expense for the nine months ended June 30, 2006 was $60,882, an increase of $21,310 over the nine months ended June 30, 2005 of $39,572. The increase in interest expense is primarily related to the additional interest payments resulting from the indebtedness incurred in connection with the Optometrics acquisition and recent increases in the prime commercial rate of interest which adversely impacts the Company's variable interest rate payments. Previous loans relating to Dynasil's New Jersey operations were refinanced with a different lender on January 5, 2006. The refinancing reduced Dynasil's interest rate on its New Jersey- based borrowings to a fixed annual rate of 7.25% and also added a $200,000 line of credit. See the Company's 8-K filing dated January 10, 2006 for additional details. Net income for the three months ended June 30, 2006 was $139,591, or $.03 in basic earnings per share, an increase of $83,457 over the net profit for the three months ended June 30, 2005 of $56,134, or $.01 in basic profit per share. The organic growth of revenues and increased gross margins on optical materials were the key drivers. Net income for the nine months ended June 30, 2006 was $246,896, or $.05 in basic earnings per share, an increase of $172,011 over the net profit for the nine months ended June 30, 2005 of $74,885, or $.02 in basic profit per share. Optometrics contributed significant additional profitability to the Company and the historical optical materials business has delivered significantly higher profitability. The Company had a $6,484 provision for Massachusetts income taxes for the quarter ended June 30, 2006 and a $4,100 provision for the quarter ended June 30, 2005. For the nine months ended June 30, 2006, the Company had a $17,980 provision for Massachusetts income taxes and a $5,224 provision for taxes for the nine months ended June 30, 2005. As of September 30, 2005, the Company had approximately $1,300,000 of net operating loss carry forwards to offset future income for federal tax purposes expiring in various years through 2021. In addition, the Company has approximately $760,000 of net operating loss carryforwards to offset certain future New Jersey taxable income, expiring in various years through 2013. Liquidity and Capital Resources Cash decreased by $10,924 for the nine months ended June 30, 2006. The primary sources of cash were net income of $246,896, depreciation and amortization expenses that aggregated $172,640, increased accounts payable of $101,267 and issuance of common stock of $41,400. The primary uses of cash were acquisition of property, plant and equipment of $71,883, an inventory increase of $298,317, net repayments of debt of $151,835, and dividend payments of $52,500 on Preferred Stock. The increase in inventory was a result of purchasing fused silica raw material in advance of a significant price increase announced by the Company's primary supplier and temporarily reduced availability of consignment inventory from that supplier. Inventory levels are expected to decline during the fourth quarter. The Company believes that its current cash and cash equivalent balances, along with the net cash generated by operations, are sufficient to meet its anticipated cash needs for working capital for at least the next 12 months. There are currently no plans for any major capital expenditures in the next six to nine months. Any major business expansion or acquisition likely will require the Company to seek additional debt or equity financing. 9 Recent Accounting Pronouncements There were no accounting pronouncements issued since the date of the Company's most recent Form 10-KSB filing that would require disclosure in the current Form 10-QSB filing. Forward-Looking Statements The statements contained in this Quarterly Report on Form 10-QSB which are not historical facts, including, but not limited to, certain statements found under the captions "Overview", "Results of Operations" and "Liquidity and Capital Resources" above, are forward-looking statements that involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this Quarterly Report on Form 10-QSB, including, without limitation, the portions of such reports under the captions referenced above, and the uncertainties set forth from time to time described in this and the Company's other filings with the Securities and Exchange Commission, and other public statements. Such risks and uncertainties include, without limitation, seasonality, interest in the Company's products, customer acceptance of new products, general economic conditions, market trends, costs and availability of raw materials and management information systems, competition, litigation, need for additional financing, the effect of governmental regulation and other matters. The Company disclaims any intention or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. ITEM 3 CONTROLS AND PROCEDURES Based on their most recent informal evaluation, which was completed during the period covered within this Form 10-QSB, the Company's President/Chief Executive Officer and Chief Financial Officer believe that the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-14 and 15d-14) are effective. There were not any significant changes in the Company's internal controls nor other facts that could significantly affect these controls subsequent to the date of this evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. The Company is presently unable to provide adequate segregation of duties within itself as a means of internal control. As a result, the Company is presently relying on overriding management reviews, and assistance from its board of directors and Audit Committee in providing short-term review procedures until such time as additional funding is provided to hire additional executives to adequately segregate duties within the Company. PART II OTHER INFORMATION - ------------------ ITEM 1 LEGAL PROCEEDINGS NONE ITEM 2 CHANGES IN SECURITIES NONE ITEM 3 DEFAULTS ON SENIOR SECURITIES NONE 11 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5 OTHER INFORMATION The information presented in Items 1 and 2 of Part I of this Report is incorporated herein by reference. On August 4, 2006, the Company issued a press release announcing its financial results for its third quarter ending June 30, 2006. A copy of this press release is attached as Exhibit 99 to this Report on Form 10-QSB. This information is being furnished pursuant to Item 5 of Part II of Form 10-QSB and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits and index of Exhibits 31.1(a) and (b) Rule 13a-14(a)/15d-14(a) Certifications 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 4, 2006, issued by Dynasil Corporation of America announcing its financial results for the second quarter ending JUNE 30, 2006. (b) Reports on Form 8-K - On July 11, 2006, a current report for Item 8, Other Events, for the signing of a letter of intent to acquire another optical manufacturing company located in the Eastern United States. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DYNASIL CORPORATION OF AMERICA BY: /s/ Craig T. Dunham DATED: August 9, 2006 --------------------------------- -------------------- Craig T. Dunham, President and CEO /s/ Laura Lunardo DATED: August 9, 2006 ----------------------------- -------------------- Laura Lunardo Chief Financial Officer 12 EX-31 2 dynex31a.txt CERTIFICATION EXHIBIT 31.1 (a) CERTIFICATION PURSUANT TO RULE 13a 14(a)/15D-14(a) and SECTION 302 OF THE SARBANES-OXLEY ACT I, Craig Dunham, the President and Chief Executive Officer of Dynasil Corporation of America, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dynasil Corporation of America; 2. Based on my knowledge, this quarterly 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 small business issuer as of, and for, the periods presented in this report; 4. The small business issuer'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 15d-15(f)) for the small business issuer 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 small business issuer, 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) Evaluated the effectiveness of the small business issuer'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 c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): -1- 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 small business issuer'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 small business issuer's internal control over financial reporting. Date: August 9, 2006 /s/ Craig T Dunham ------------------ ------------------------------------ Craig T Dunham President and Chief Executive Officer -2- EX-31 3 dynex31b.txt CERTIFICATION EXHIBIT 31.1 (b) CERTIFICATION PURSUANT TO RULE 13a 14(a)/15D-14(a) and SECTION 302 OF THE SARBANES-OXLEY ACT I, Laura Lunardo, Chief Financial Officer of Dynasil Corporation of America, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dynasil Corporation of America; 2. Based on my knowledge, this quarterly 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 small business issuer as of, and for, the periods presented in this report; 4. The small business issuer'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 15d-15(f)) for the small business issuer 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 small business issuer, 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) Evaluated the effectiveness of the small business issuer'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 c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's -1- fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: August 9, 2006 /s/ Laura Lunardo ----------------------------- Laura Lunardo Chief Financial Officer -2- EX-32 4 dynex32-1.txt CERTIFICATION 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 10QSB for the period ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), We, Craig T Dunham, President and Chief Executive Officer of The Company and Laura Lunardo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of The Company. /s/ Craig T Dunham ------------------- Craig T Dunham President and Chief Executive Officer /s/ Laura Lunardo ------------------- Laura Lunardo Chief Financial Officer August 9, 2006 EX-99 5 dyn0606-10qsbex99.txt PRESS RELEASE Contact: Craig Dunham Dynasil Corporation of America Phone: (856) 767-4600 Email: cdunham@Dynasil.com Dynasil Announces Third Quarter Fiscal Year 2006 Results WEST BERLIN, N.J.- August 4, 2006 --Dynasil Corporation of America (OTCBB: DYSL.OB), fabricator of optical blanks from synthetic fused silica, fused quartz, and other optical materials for the semi- conductor, laser, space and optical components industries, and through its subsidiary, Optometrics Corporation, a worldwide supplier of optical components including diffraction gratings, thin film filters, laser optics, monochromators, and specialized optical systems, announced results of operations for the 3rd quarter ended June 30, 2006. This is the fifth full quarter of results after the combination of Optometrics with Dynasil. As previously announced, the acquisition of the assets of Optometrics LLC was completed on March 8, 2005. Revenues for the quarter ended June 30, 2006 were $1,833,869, an increase of 13% over revenues of $1,619,128 for the quarter ended June 30, 2005. The net profit for the quarter ended June 30, 2006 was $139,591, or $.03 per share, compared with a net profit of $56,134, or $.01 per share, for the quarter ended June 30, 2005. Revenue growth in both business units and strong manufacturing efficiencies were the largest drivers of the profitability gains. Revenues for the 9 months ended June 30, 2006 were $5,047,405, an increase of 44% over revenues of $3,497,340 for the 9 months ended June 30, 2005. The net profit for the 9 months ended June 30, 2006 was $246,896, or $0.05 per share, compared with a net profit of $74,885, or $0.02 per share, for the 9 months ended June 30, 2005. The addition of Optometrics for the full year was the largest driver for the revenue and profitability gains. "I am pleased with the strong results for the quarter and the significant profitability increase over our last year" said Craig T. Dunham, President and CEO. "The addition of Optometrics has had a major positive impact on Dynasil and we are implementing progressive cost reductions and process improvements which have increased profitability. We continue to focus on our strategy of profitable growth from our optical components businesses and by pursuing acquisitions and strategic alliances". About Dynasil: Founded in 1960, Dynasil Corporation of America is a fabricator of optical blanks from synthetic fused silica, fused quartz and other optical materials as well as optical components and specialized optical systems. This news release may contain forward-looking statements usually containing the words "believe," "expect," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. Future results of operations, projections, and expectations, which may relate to this release, involve certain risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the factors detailed in the Company's Annual Report or Form 10-KSB and in the Company's other Securities and Exchange Commission filings, continuation of existing market conditions and demand for our products. Dynasil Corporation of America and Subsidiaries Consolidated Balance Sheets (Unaudited) June 30 September 30 2006 2005 (Unaudited) ASSETS Current assets Cash and cash equivalents $297,286 $308,210 Accounts receivable 887,791 877,375 Inventories 1,140,466 842,149 Other current assets 121,165 124,548 --------- --------- Total current assets 2,446,708 2,152,282 Property, plant and equipment, net 655,077 744,764 Other assets 76,665 87,735 --------- --------- Total Assets $3,178,450 $2,984,781 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Note payable to bank- Line of $190,000 $250,000 credit Current portion of long-term 73,806 184,403 debt Accounts payable 387,078 322,094 Accrued expenses and other 277,201 232,476 current liabilities --------- --------- Total current liabilities 928,085 988,973 Long-term debt, net 611,474 592,712 Stockholders' Equity 1,638,891 1,403,096 --------- --------- Total Liabilities and $3,178,450 $2,984,781 Stockholders' Equity ========= ========= DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 Sales $1,833,869 $1,619,128 $5,047,405 $3,497,340 Cost of Sales 1,164,997 1,103,318 3,307,189 2,500,119 --------- --------- --------- --------- Gross Profit 668,872 515,810 1,740,216 997,221 Selling, general and 501,159 434,966 1,414,458 877,540 administrative --------- --------- --------- --------- Income (Loss) from Operations 167,713 80,844 325,758 119,681 Interest expense - net (21,638) (20,610) (60,882) (39,572) --------- --------- --------- --------- Income (Loss) before Income 146,075 60,234 264,876 80,109 Taxes Income Taxes 6,484 4,100 17,980 5,224 --------- --------- --------- --------- Net Income (Loss) $139,591 $56,134 $246,896 $74,885 --------- --------- --------- --------- Net Income (Loss) per share Basic $0.03 $0.01 $0.05 $0.02 Diluted $0.02 $0.01 $0.04 $0.02 -----END PRIVACY-ENHANCED MESSAGE-----