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Dynasil Corporation of America Reports First Quarter Fiscal 2014 Financial Results



  Dynasil Corporation of America Reports First Quarter Fiscal 2014 Financial
                                   Results

Company Sells Instruments Businesses and Returns to Profitability

PR Newswire

WATERTOWN, Mass., Feb. 12, 2014

WATERTOWN, Mass., Feb. 12, 2014 /PRNewswire/ -- Dynasil Corporation of America
(NASDAQ: DYSL), a developer and manufacturer of optical detection and analysis
technology and components for the homeland security, medical and industrial
markets, today announced financial results for the fiscal 2014 first quarter
ended December 31, 2013. 

Dynasil reported net income for the quarter of $1,458,000 or $0.10 per share,
compared with a net loss of ($379,000), or ($0.03) per share, for the quarter
ended December 31, 2012.  Net income for the quarter includes a gain of
$1,187,000 associated with the sale of the Company's lead paint and medical
products businesses. 

"I am very happy to report that this quarter's results mark a return to
profitability, a substantial reduction in our senior debt and compliance with
our bank covenant ratios and the Nasdaq listing requirements," said Dynasil
Chairman and Interim CEO Peter Sulick.  "In addition, we successfully
completed the sale of our LPX and Navigator product lines and the contribution
of our tissue sealant technology to Xcede Technologies, Inc., a joint venture
with Mayo Clinic.  We expect Xcede to independently raise future funding for
the continuing development of this promising technology."

Net revenue for the first quarter of fiscal 2014 increased slightly to $10.7
million, compared with $10.6 million for the first quarter of fiscal 2013. 
Revenue increased approximately $900,000 or 19% in the Contract Research
segment in the quarter while the Instruments segment declined approximately
$500,000 or 40% primarily as a result of the sale of the lead paint and
medical products businesses.  Gross profit for the first quarter of 2014
declined slightly to $4.5 million from $4.6 million for the same period in
2013.  Gross margins decreased to 41.5% in the quarter compared to 43.8% for
the first quarter of fiscal 2013. 

Operating expenses for the three months ended December 31, 2013 were $4.0
million, a decrease of $883,000 compared to the same period in 2013.  The
decrease was primarily a result of reduced product development costs
associated with the lead paint and medical products businesses which were sold
during the quarter ended December 31, 2013.

The Company is in compliance with the debt covenants ratios included in its
senior loan agreement for the three months ended December 31, 2013, but has
not yet paid interest due to its subordinated lender or obtained waivers from
both its lenders for its covenant violations for prior periods, and thus
remains in default with both of its lenders.  The Company has made all
principal and interest payments due to its senior lender through February 12,
2014, the date of this earnings release, and has accrued but has not paid
approximately $400,000 due to its subordinated lender since February, 2013.
  Management has initiated discussions with its lenders in order to address
the default situation.  However, the Company cannot predict when or whether a
resolution of this situation will be achieved.

Quarterly Business Highlights

The Company successfully completed three transactions within the first quarter
of fiscal 2014 that were important steps in significantly reducing its debt
with Santander Bank and returning the Company to profitability.  On October 1,
2013, Dynasil Biomedical formed Xcede, a joint venture with the Mayo Clinic,
to spin out and separately fund the development of its tissue sealant
technology.  Xcede has initiated financing efforts and has received funding
from outside investors including certain directors of the Company.  On
November 7, 2013, the Company sold its lead paint detector business to Protec
Instrument Corporation, which is a wholly owned subsidiary of Laboratoires
Protec S.A., a French corporation and former European distributor of the lead
paint detector products; and on December 23, 2013, Dynasil sold its Gamma
Medical Probe business to Dilon Technologies, Inc.   Approximately $3.9
million of the proceeds from the sales were used to reduce the Company's bank
debt.

"Now that we have been successful in reducing our debt and returning to
profitability, the Company can continue to pursue various commercialization
opportunities arising from technologies developed within our Contract Research
segment," stated Mr. Sulick.  "We are continuing our efforts to further
improve the size and quality of our CLYC crystals and have other exciting new
technologies in development."  

The Company has no conference calls scheduled at this time.

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

Forward-looking Statements

This news release may contain forward‑looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.  These forward-looking
statements regarding future events and our future results are based on current
expectations, estimates, forecasts, and projections and the beliefs and
assumptions of our management, including, without limitation, our expectations
regarding results of operations, our 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, filed on December 20, 2013, including
the risk factors contained in Item 1a, the Company's Quarterly Report on Form
10-Q filed on February 12, 2014 and from time to time in the Company's other
filings with the Securities and Exchange Commission. The Company disclaims any
intention or obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.

Contact:
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                                   December 31, 2013  September 30, 2013
Current Assets
   Cash and cash equivalents             $                  $              
                                         2,755,356          2,436,828
   Accounts receivable, net              2,633,601          3,657,320
   Costs in excess of billings and       2,292,809          1,537,318
unbilled receivables
   Inventories, net of reserves          2,678,524          3,140,244
   Prepaid expenses and other current    1,509,878          1,291,942
assets
                     Total current       11,870,168         12,063,652
assets
Property, Plant and Equipment, net       4,568,183          4,773,779
Other Assets
   Intangibles, net                      1,357,492          3,484,583
   Goodwill                              6,256,323          6,240,983
   Deferred financing costs, net         103,137            114,229
                     Total other assets  7,716,952          9,839,795
                     Total Assets        $                  $            
                                         24,155,303         26,677,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Current portion of long-term debt     $                  $              
                                         5,429,762          9,819,048
   Capital lease obligations, current    124,383            124,383
   Accounts payable                      2,045,238          2,056,262
   Deferred revenue                      347,688            515,790
   Accrued expenses and other            2,875,923          2,846,850
liabilities
                     Total current       10,822,994         15,362,333
liabilities
Long-term Liabilities
   Capital lease obligations, net of     269,490            232,173
current portion
   Convertible notes                     378,461            -
   Pension liability                     249,966            249,966
   Deferred tax liability                183,417            186,866
                    Total long-term      1,081,334          669,005
liabilities
Stockholders' Equity
   Dynasil stockholders' equity          12,263,162         10,645,888
Noncontrolling interest                  (12,187)           -
                    Total stockholders'  12,250,975         10,645,888
equity
Total Liabilities and Stockholders'      $                  $            
Equity                                   24,155,303         26,677,226

 

Dynasil Corporation of America and Subsidiaries
Consolidated Statement of Operations
                                     Three Months Ended
                                     December 31,
                                     2013                  2012
Net revenue                          $        10,711,528   $        10,553,275
Cost of revenue                      6,261,000             5,926,409
Gross profit                         4,450,528             4,626,866
Operating expenses:
 Sales and marketing expenses        396,805               479,878
 Research and development expenses   346,197               637,129
 General and administrative          3,279,999             3,788,949
 expenses
Total operating expenses             4,023,001             4,905,956
Gain on sale of assets               1,186,691             87,803
Income (loss) from operations        1,614,218             (191,287)
Interest expense, net                212,778               186,757
Income (loss) before taxes           1,401,440             (378,044)
Income tax (credit) provision        (44,043)              1,298
Net income (loss)                    1,445,483             (379,342)
 Less: Net loss attributable to      (12,187)              -
 noncontrolling interest
Net income (loss) attributable to    $          1,457,670  $          
common stockholders                                         (379,342)
Net income (loss)                    $          1,445,483  $          
                                                            (379,342)
Other comprehensive income (loss):
 Foreign currency translation        36,164                29,739
Total comprehensive income (loss)    $          1,481,647  $          
                                                            (349,603)
Basic net income (loss) per common   $                     $                
share                                 0.10                 (0.03)
Diluted net income (loss) per        $                     $                
common share                          0.10                 (0.03)
Weighted average shares outstanding
 Basic                               15,021,757            14,673,356
 Diluted                             15,281,841            14,673,356

 

 

 

SOURCE Dynasil Corporation of America

Website: http://www.dynasil.com
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