Dynasil Corporation of America Reports Second Quarter Fiscal 2013 Financial Results

  Dynasil Corporation of America Reports Second Quarter Fiscal 2013 Financial

Business Wire

WATERTOWN, Mass. -- May 15, 2013

Dynasil Corporation of America (NASDAQ: DYSL), a leading developer of sensing,
detection and analysis technology for homeland security, medical and
industrial applications, today announced financial results for the fiscal 2013
second quarter ended March 31, 2013.

Net revenue for the second quarter of fiscal 2013 declined $1.8 million to
$10.5 million, compared with $12.3 million for the second quarter of fiscal
2012. Revenue declines in the Contract Research and Instruments segments in
the quarter were partially offset by an increase in the Optics segment
revenues. Gross profit for the second quarter of 2013 declined $300,000 to
$4.8 million from $5.1 million for the same period in 2012 as gross margins
increased to 46% in the quarter compared to 41% for the second quarter of
fiscal 2012.

“The improvement in our gross margin is a result of our focus on right-sizing
the cost structure of our various businesses while we continue to conserve
cash, work through our debt issues and strive to achieve profitability,” said
Dynasil Chairman and Interim CEO Peter Sulick. “In addition, I am happy to
report that exciting growth initiatives are underway, particularly in the
Contract Research and Optics segments of the Company. We are all working hard
to reduce our overhead expenses, improve our EBITDA performance and strengthen
our technology portfolio.”

Operating expenses for the current quarter include a non-cash impairment
charge of $6,763,000 to write-down goodwill and other intangible assets
associated with the Company’s Products business. As a result, total operating
expenses for the three months ended March 31, 2013 were $12.0 million. Total
operating expenses for the three months ended March 31, 2013 increased $6.3
million compared to the same period in 2012. The increase was a result of the
$6.8 million impairment charge offset by reduced expenditures associated with
the product refresh within the Instruments segment in 2012.

Dynasil reported a net loss for the quarter of ($7.2 million) or ($0.49) per
share, compared with net loss of ($585,000), or ($0.04) per share, for the
quarter ended March 31, 2012. The impairment loss was $6.8 million of the
total loss of $7.2 million.

The Company was in default of certain financial covenants set forth in the
terms of its outstanding indebtedness as of March 31, 2013, December 31, 2012
and September 30, 2012. The Company has accrued but not remitted interest
payments for February and March 2013 to its subordinated lender. The Company
has made all principal and interest payments due to its senior lender through
May 15, 2013, the date of this filing. Management has provided a revised
forecast to its lenders and is engaged in discussions with its senior lender
to address the financial covenant situation. However, the Company cannot
predict when or whether a resolution of this situation will be achieved.

Business Outlook

The Company has continued to seek regulatory approvals of its updated medical
probe for cancer surgery product and approval is expected in the third
quarter. The Company is currently evaluating preliminary test results received
on its updated lead paint analyzer product while also evaluating strategic
alternatives associated with the product.

The Company continues to invest in efforts to support growth initiatives for
its dual mode detector commercialization effort within Contract Research and
development of certain biomedical technologies. These investments include
technology development activities, capital equipment depreciation, development
of intellectual property, and staff.

The dual mode detector technology is beginning to produce revenue. The Company
is currently delivering limited quantities of commercial grade crystals and
packaged detectors, and is working to further improve the size and quality of
this product. Also, at the current time, the Company is actively exploring
commercialization opportunities in gamma cameras, sensors for nondestructive
testing and radiation dosimeters based on technologies developed in the
Contracts Research segment. However, there can be no assurance that these
efforts will be successful.

Additionally, the Company has prepared a separate business and financing plan
for one of the biomedical technologies. The intention was to spin out the
tissue sealant technology into an independent entity in which the Company
would retain a substantial interest. This would accomplish both the
elimination of some of the G&A support for these technologies as well as
enable the Company to recruit additional expertise to help advance the
technology. During the second quarter, the Company’s senior lender refused to
release the intellectual property and related collateral in connection with
the spin-out. As a result, the Company continued to fund this research through
the second quarter; however, there can be no assurance that we will continue
to fund this research or consummate this transaction at any future time.

The Company has no conference calls scheduled at this time.

About Dynasil

Dynasil Corporation of America (NASDAQ: DYSL) develops and manufactures
detection and analysis technology, precision instruments and optical
components for the homeland security, medical and industrial markets.
Combining world-class technology with expertise in research and materials
science, Dynasil is commercializing products including dual-mode radiation
detection solutions for Homeland Security and commercial applications, probes
for medical imaging and sensors for non-destructive testing. The Company is
building a relationship with the Mayo Clinic to develop early-stage
opportunities such as advanced biomedical technologies. Dynasil has an
impressive and growing portfolio of issued and pending U.S. patents. The
Company is based in Watertown, Massachusetts, with additional operations in
Mass., Minn., NY, NJ and the United Kingdom. More information about the
Company is available at www.dynasil.com.

Forward-looking Statements

This news release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements regarding future events and our future results are based on current
expectations, estimates, forecasts, and projections and the beliefs and
assumptions of our management, including, without limitation, our expectations
regarding results of operations, the commercialization of our products
including our dual mode detectors, the adequacy of our current financing
sources to fund our current operations, our growth initiatives, our capital
expenditures, regulatory approvals and the strength of our intellectual
property portfolio. These forward-looking statements may be identified by the
use of words such as “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 resolve our current default under
our outstanding indebtedness, our ability to develop and commercialize our
products, including obtaining regulatory approvals, the size and growth of the
potential markets for our products and our ability to serve those markets, the
rate and degree of market acceptance of any of our products, our ability to
address our material weaknesses in our internal controls, general economic
conditions, costs and availability of raw materials and management information
systems, our ability to obtain and maintain intellectual property protection
for our products, competition, the loss of key management and technical
personnel, our ability to obtain timely payment of our invoices to
governmental customers, litigation, the effect of governmental regulatory
developments, the availability of financing sources, our ability to identify
and execute on acquisition opportunities and integrate such acquisitions into
our business, and seasonality, as well as the uncertainties set forth in the
Company’s 2012 Annual Report on Form 10-K, as amended on February 14, 2013,
including the risk factors contained in Item 1a, the Company’s Quarterly
Report on Form 10-Q filed on February 13, 2013 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

Dynasil Corporation of America and Subsidiaries
Consolidated Balance Sheets

                                                 31-Mar        30-Sep
                                                   2013            2012
ASSETS                                             (Unaudited)     
Current Assets
Cash and cash equivalents                          $2,132,901      $3,414,880
Accounts receivable, net                           4,389,394       5,475,142
Costs in excess of billings and unbilled           1,755,185       1,735,798
Inventories, net of reserves                       3,658,215       3,271,700
Deferred tax asset                                 126,187         126,187
Prepaid expenses and other current assets          1,426,916       1,334,649
Total current assets                               13,488,798      15,358,356
Property, Plant and Equipment, net                 4,738,147       4,984,150
Other Assets
Intangibles, net                                   3,776,038       6,703,305
Goodwill                                           6,135,642       10,254,160
Deferred financing costs, net                      139,843         165,457
Total other assets                                 10,051,523      17,122,922
Total Assets                                       $28,278,468     $37,465,428
Current Liabilities
Current portion of long-term debt                  $11,047,619     $11,984,492
Capital lease obligations, current                 113,243         -0-
Accounts payable                                   2,536,408       2,416,397
Deferred revenue                                   741,427         694,672
Accrued expenses and other liabilities             1,849,936       2,809,580
Total current liabilities                          16,288,633      17,905,141
Long-term Liabilities
Capital lease obligations, net of current          252,381         -0-
Pension liability                                  342,848         345,443
Deferred tax liability                             195,895         371,256
Total long-term liabilities                        791,124         716,699
Stockholders' Equity                               11,198,711      18,843,588
Total Liabilities and Stockholders' Equity         $28,278,468     $37,465,428

Dynasil Corporation of America and Subsidiaries
Consolidated Statement of Operations

                 Three Months Ended             Six Months Ended
                   March 31,                        March 31,
                   2013           2012            2013           2012
Net revenue        $10,484,530      $12,299,010     $21,037,805      $24,431,305
Cost of            5,692,958        7,214,667       11,619,367       14,220,014
Gross profit       4,791,572        5,084,343       9,418,438        10,211,291
Sales and
marketing          486,544          451,961         966,422          844,762
Research and
development        573,229          1,102,445       1,210,358        1,621,840
General and
administrative     4,216,741        4,129,653       7,917,887        8,158,077
Impairment of
goodwill and       6,763,072        -0-             6,763,072        -0-
operating          12,039,586       5,684,059       16,857,739       10,624,679
Loss from          (7,248,014)      (599,716)       (7,439,301)      (413,388)
Interest           177,159          122,474         363,916          246,631
expense, net
Loss before
income tax         (7,425,173)      (722,190)       (7,803,217)      (660,019)
Income tax         (183,443)        (137,180)       (182,145)        (445,347)
Net loss           ($7,241,730)     ($585,010)      ($7,621,072)     ($214,672)
Net loss           ($7,241,730)     ($585,010)      ($7,621,072)     ($214,672)
income (loss):
currency           (275,360)        138,552         (245,621)        78,192
comprehensive      ($7,517,090)     ($446,458)      ($7,866,693)     ($136,480)
Basic net loss
per common         ($0.49)          ($0.04)         ($0.52)          ($0.01)
Diluted net
loss per           ($0.49)          ($0.04)         ($0.52)          ($0.01)
common share
average shares
Basic              14,770,943       15,002,818      14,721,733       15,091,356
Diluted            14,770,943       15,002,818      14,721,733       15,091,356


Dynasil Corporation of America
Patty Kehe
Corporate Secretary
Phone: (617) 668-6855
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