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Dynasil Corporation of America Reports Second Quarter Fiscal 2014 Financial Results

Companies mentioned in this article: Dynasil Corporation of America

WATERTOWN, Mass., May 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 second quarter ended March 31, 2014.

Dynasil reported net income attributable to common stockholders for the quarter of $272,000 or $0.02 per share, compared with a net loss of ($7,242,000), or ($0.49) per share, for the quarter ended March 31, 2013. Net income for the six months ended March 31, 2014 is $1,729,000, or $0.11 per share, as compared to a net loss of ($7,621,000), or ($0.52) per share, for the comparable period in 2013.

"I am pleased to report that Dynasil had a second consecutive quarter of profitability and, as previously reported, we recently closed on a new revolving line of credit with Middlesex Savings Bank and have regained compliance with the terms of our subordinated loan from Massachusetts Capital Resource Company," said Dynasil Chairman and Interim CEO Peter Sulick. "Additionally, with the improved operational performance within our Optics Group and improvements in our Contract Research profitability we have largely replaced the revenue lost as a result of the disposition of our Instruments segment."

Net revenue for the second quarter of fiscal 2014 decreased slightly to $10.4 million, from $10.5 million in the second quarter of fiscal 2013. In this quarter, the Optics segment's revenues increased approximately $900,000, or 21.8% over the same period in the prior year. This increase was offset by a $1.0 million decrease in revenues from the now divested Instruments segment which was sold during the first quarter of 2014.

Operating expenses for the three months ended March 31, 2014 were $3.9 million, a decrease of $8.1 million compared to the same period in 2013. This decrease brings our operating expenses more in line with our traditional experience, following a $6.8 million impairment charge in the quarter ended March 31, 2013 to write-down the goodwill and long-lived assets of the Company's Instruments segment. Additionally, the now disposed lead paint detection and medical products businesses in the Instruments segment, incurred substantial development costs associated with product refreshes during the second quarter of 2013.

As a result, operating income for the quarter ended March 31, 2014, increased to approximately $500,000 from a loss of ($7.2) million in the quarter ended March 31, 2013.

On May 1, 2014, the Company entered into a three year revolving line of credit arrangement with Middlesex Savings Bank. Upon the closing of the loan, the Company repaid the approximately $1.8 million owed Santander Bank, N.A. and the $600,000 of accrued interest due Massachusetts Capital Resource Company, the subordinated lender. As a result, the Company is no longer in default of any of its loan obligations and has reclassified the subordinated debt to a long term liability based on its terms.

"Now that we have been successful in regaining compliance with our bank covenants, the Company can pursue growth opportunities in the optics market, as well as continuing to develop cutting-edge technologies within our Contract Research segment," stated Mr. Sulick. "We are also happy to report that our joint venture with Mayo Clinic, Xcede Technologies, has raised an additional $250,000 from note holders to further fund it research efforts in tissue sealant technology."

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

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 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, our ability to remediate the material weaknesses in our internal control over financial reporting, 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, 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 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.

     Corporation of
     America and

     Balance Sheet

                    ASSETS              March 31, 2014      September 30, 2013
                                        --------------      ------------------

    Current Assets

       Cash and cash
        equivalents                             $3,465,644              $2,436,828

        receivable, net                          2,781,759               3,657,320

       Costs in excess
        of billings and
        receivables                              1,917,012               1,537,318

       Inventories, net
        of reserves                              2,979,550               3,140,244

       Prepaid expenses
        and other
        current assets                           1,387,620               1,291,942
                                                 ---------               ---------

                         Total current
                          assets                12,531,585              12,063,652

    Property, Plant
     and Equipment,
     net                                         4,670,360               4,773,779

    Other Assets

       Intangibles, net                          1,321,561               3,484,583

       Goodwill                                  6,272,228               6,240,983

        costs, net                                  37,739                 114,229
                                                    ------                 -------

                         Total other
                          assets                 7,631,528               9,839,795
                                                 ---------               ---------

                         Total Assets          $24,833,473             $26,677,226
                                               ===========             ===========

               LIABILITIES AND


       Current portion
        of long-term
        debt                                    $1,976,769              $9,819,048

       Capital lease
        current                                    128,979                 124,383

       Accounts payable                          2,283,275               2,056,262

       Deferred revenue                            193,890                 515,790

       Accrued expenses
        and other
        liabilities                              3,482,572               2,846,850
                                                 ---------               ---------

                         Total current
                          liabilities            8,065,485              15,362,333


       Long-term debt,
        net of current
        portion                                  3,127,795                       -

       Capital lease
        net of current
        portion                                    163,116                 232,173

        notes                                      383,084                       -

        liability                                  249,966                 249,966

       Deferred tax
        liability                                  179,927                 186,866
                                                   -------                 -------

                        Total long-term
                         liabilities             4,103,888                 669,005


        equity                                  12,694,587              10,645,888

     interest                                      (30,487)                      -
                                                   -------                     ---

                         equity                 12,664,100              10,645,888

     Liabilities and
     Equity                                    $24,833,473             $26,677,226
                                               ===========             ===========

    Dynasil Corporation of America and Subsidiaries

    Consolidated Statement of Operations and Comprehensive Income (Loss)


                                             Three Months Ended                       Six Months Ended

                                                 March 31,                               March 31,

                                              2014                2013               2014                2013
                                              ----                ----               ----                ----

    Net revenue                        $10,406,458         $10,484,530        $21,117,986         $21,037,805

    Cost of revenue                      6,047,571           5,843,017         12,308,571          11,890,038

    Gross profit                         4,358,887           4,641,513          8,809,415           9,147,767


      Sales and
       marketing                           312,729             486,544            709,534             966,422

      Research and
       development                         378,379             573,229            724,577           1,210,358

      General and
       administrative                    3,200,552           4,066,682          6,480,546           7,647,216

      Impairment of
       goodwill and
       assets                                    -           6,763,072                  -           6,763,072
                                               ---                                    ---

    Total operating
     expenses                            3,891,660          11,889,527          7,914,657          16,587,068

    Gain on sale of
     assets                                      -                   -         (1,186,686)                  -
                                               ---                 ---         ----------                 ---

    Income (loss)
     operations                            467,227          (7,248,014)         2,081,444          (7,439,301)

     expense, net                          209,330             177,159            422,107             363,916
                                           -------             -------            -------             -------

    Income (loss)
     before taxes                          257,897          (7,425,173)         1,659,337          (7,803,217)

    Income tax
     provision                               4,602            (183,443)           (39,441)           (182,145)

    Net income
     (loss)                                253,295          (7,241,730)         1,698,778          (7,621,072)
                                           -------          ----------          ---------          ----------

      Less: Net loss
       interest                            (18,300)                  -            (30,487)                  -
                                           -------                 ---            -------                 ---

    Net income
     to common
     stockholders                         $271,595         $(7,241,730)        $1,729,265         $(7,621,072)
                                          ========         ===========         ==========         ===========

    Net income
     (loss)                               $253,295         $(7,241,730)        $1,698,778         $(7,621,072)

     income (loss):

       translation                          36,845            (275,360)            73,009            (245,621)

     income (loss)                        $290,140         $(7,517,090)        $1,771,787         $(7,866,693)
                                          ========         ===========         ==========         ===========

    Basic net
     income (loss)
     per common
     share                                   $0.02              $(0.49)             $0.11              $(0.52)

    Diluted net
     income (loss)
     per common
     share                                   $0.02              $(0.49)             $0.11              $(0.52)

     average shares

      Basic                             15,102,023          14,770,943         15,061,890          14,721,733

      Diluted                           15,285,232          14,770,943         15,216,915          14,721,733

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

SOURCE Dynasil Corporation of America