Dynasil Corporation of America Reports Fiscal Year 2013 Financial Results

  Dynasil Corporation of America Reports Fiscal Year 2013 Financial Results

Filing of Annual Report on Form 10-K

PR Newswire

WATERTOWN, Mass., Dec. 20, 2013

WATERTOWN, Mass., Dec.20, 2013 /PRNewswire/ --Dynasil Corporation of America
(NASDAQ: DYSL), a developer of sensing, detection and analysis technology for
homeland security, medical and industrial applications, today announced
financial results for fiscal year ended September 30, 2013 and the filing of
its Annual Report on Form 10-K.

Revenues for the fiscal year ended September 30, 2013 were $42.8 million. This
represents a decrease of $5.1 million or 10.6% over revenues for the fiscal
year ended September 30, 2012 of $47.9 million.

Gross profit for fiscal 2013 totaled $18.1 million, or 42.3% of net revenue,
compared with $19.5 million, or 40.7% of revenue for fiscal 2012. Gross
profit margin improved primarily as a result of higher gross margins in the
Contract Research segment partially offset by a decrease in the Instruments
segment.

Selling, general and administrative expenses decreased $1.5 million to $19.4
million or 45.4% of sales in fiscal year 2013, from $20.9 million or 43.7% of
sales for fiscal year 2012. SG&A expenses decreased primarily as a result of
the substantial completion of the engineering costs associated with the
product refreshes in our Instruments segment.

The Instruments segment had the greatest decrease in SG&A costs, decreasing
$1.6 million to $3.5 million in 2013 compared to $5.1 million in 2012. This
segment had two main product lines: a hand-held lead paint analyzer and a
medical gamma probe used primarily in breast cancer treatment. The Company
began a product refresh on both product lines in 2012 to enhance them with new
features and functionality to maintain their market positions. The Company
spent $1.3 million in fiscal year 2012 on research and development on the
products and significant additional amounts on sales and marketing efforts in
advance of the new product launches. In fiscal year 2013, these costs and
other SG&A costs were substantially reduced while awaiting regulatory
approval.

The Company's updated medical probe, the Navigator 2.0, was approved for sale
in May of 2013. However, as a result of the delays associated with both
product line updates and an internal review of strategic alternatives for the
lead paint analyzer product, the Company performed an interim impairment test
of the Instrument segment and recorded an impairment of goodwill and
intangibles totaling $6.8 million in the quarter ending March 31, 2013.

"As reported previously, we are making important steps in right-sizing our
business, reducing outstanding indebtedness, and eliminating cost. With the
spin out of our tissue sealant technology to the newly-formed subsidiary,
Xcede Technologies, Inc. in October and the divestiture of our XRF product
line in November, we continue to make significant improvements to our cash
flows and our balance sheet," said Peter Sulick, Chairman and CEO of
Dynasil. "Going forward, we are focused on improving our liquidity and
pursuing strategic initiatives that best position the company for future
profitable growth."

Including the goodwill impairment charge, net loss for the 12 months ended
September 30, 2013 was $8.7 million, or $0.59 per share, compared with a loss
of $4.3 million, or $0.29 per share, in fiscal 2012.

Liquidity

On December 31, 2012, the Company announced it was in default of certain
financial covenants set forth in the terms of its outstanding indebtedness
with respect to its fiscal year ended September 30, 2012. We continued to be
in default throughout our fiscal year ended September 30, 2013 and currently
remain in default. As a result, our lenders have the ability to require
immediate payment of all indebtedness under our loan agreements. While the
lenders have not exercised this right, their ability to require immediate
payment has caused all of our outstanding indebtedness to be accelerated to
current classification in our consolidated financial statements.

The Company has made all principal and interest payments due to its senior
lender through the date of this filing. In addition to making the required
principal payments of approximately $1.9 million during fiscal year 2013, the
Company also repaid an additional $300,000 of principal in connection with the
contribution of its tissue sealant intellectual property to Xcede
Technologies, Inc., a joint venture with Mayo Clinic formed on or about
October 1, 2013 to spin out and separately fund the development of the tissue
sealant technology. Xcede has initiated financing efforts and has received
funding from internal sources and outside investors.

The Company has accrued but not remitted monthly interest payments to its
subordinated lender since February 2013 and does not expect to resume interest
payments to its subordinated lender until it resolves its default with the
senior lender.

Subsequent to fiscal year-end, the Company also repaid approximately $1.25
million of principal to its senior lender from the proceeds received from the
sale of its lead paint business included in the Instruments segment.
Management is continuing to pursue potential other sales transactions which,
if consummated, would result in additional principal payments to the bank and
also expects to continue discussions with its lenders to address the financial
covenant situation. Because of the continuing default of the financial
covenants and the possibility of an acceleration of the indebtedness by the
lenders, the Company has classified all its outstanding indebtedness as a
current liability in the accompanying consolidated balance sheets.

Given the Company's results and the uncertainty created by the defaults under
the outstanding indebtedness, the Company's independent registered public
accounting firm has included a "going concern" explanatory paragraph in its
audit opinion for the year ended September 30, 2013.

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, 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 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 results of operations, our default under the financial
covenants under our loan agreement with Santander 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, 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 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 deleverage our balance sheet, 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 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.

Contacts:
Patty Kehe
Corporate Secretary
Dynasil Corporation of America
Phone: 617.668.6855
pkehe@dynasil.com



DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS                                            September 30,  September 30,
                                                  2013           2012
Current Assets
 Cash and cash equivalents                      $        $      
                                                  2,436,828      3,414,880
 Accounts receivable, net                       3,657,320      5,475,142
 Costs in excess of billings and unbilled       1,537,318      1,735,798
receivables
 Inventories, net of reserves                   3,140,244      3,271,700
 Prepaid expenses and other current assets      1,291,942      1,460,836
 Total current assets         12,063,652     15,358,356
Property, Plant and Equipment, net                4,773,779      4,984,150
Other Assets
 Intangibles, net                               3,484,583      6,703,305
 Goodwill                                       6,240,983      10,254,160
 Deferred financing costs, net                  114,229        165,457
 Total other assets           9,839,795      17,122,922
 Total Assets                 $         $     
                                                  26,677,226     37,465,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
 Current portion of long-term debt              $        $     
                                                  9,819,048      11,984,492
 Capital lease obligations, current             124,383        -
 Accounts payable                               2,056,262      2,416,397
 Deferred revenue                               515,790        694,672
 Accrued expenses and other liabilities         2,846,850      2,809,580
 Total current liabilities    15,362,333     17,905,141
Long-term Liabilities
 Capital lease obligations, net of current      232,173        -
portion
 Pension liability                              249,966        345,443
 Deferred tax liability                         186,866        371,256
 Total long-term liabilities   669,005        716,699
Stockholders' Equity                              10,645,888     18,843,588
Total Liabilities and Stockholders' Equity        $         $     
                                                  26,677,226     37,465,428





DYNASIL CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF OPERATIONS
                                  2013                    2012
Net revenue                       $    42,752,832      $    47,887,150
Cost of revenue                   24,667,087              28,381,407
Gross profit                      18,085,745              19,505,743
Operating expenses:
 Sales and marketing expenses     1,746,865               1,729,703
 Research and development         2,307,407               2,810,778
 expenses
 General and administrative       15,371,494              16,386,454
 expenses
 Impairment of goodwill and       6,829,072               2,284,499
 long-lived assets
Total operating expenses          26,254,838              23,211,434
Loss from operations              (8,169,093)             (3,705,691)
Interest expense, net             861,038                 639,096
Loss before income taxes          (9,030,131)             (4,344,787)
Income tax credit                 (302,960)               (41,021)
Net loss                          $    (8,727,171)     $    (4,303,766)
Net loss                          $    (8,727,171)     $    (4,303,766)
Other comprehensive loss:
 (Increase) decrease in pension   $       92,513   $     (345,443)
 liability
 Foreign currency translation     (1,734)                 109,783
Total comprehensive loss          $    (8,636,392)     $    (4,539,426)
Basic net loss per common share   $        (0.59)  $       
                                                          (0.29)
Diluted net loss per common       $        (0.59)  $       
share                                                     (0.29)
Weighted average shares
outstanding
 Basic                            14,812,858              14,811,294
 Diluted                          14,812,858              14,811,294



SOURCE Dynasil Corporation of America

Website: http://www.dynasil.com
 
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