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
<PAGE>
            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
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                     ASSETS

<TABLE>
<S>                                       <C>            <C>
                                          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
                                          ==========       ==========

</TABLE>

                                       3

<PAGE>


DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)


<TABLE>
<S>                                   <C>                        <C>
                                          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

</TABLE>


                                     4
<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<S>                                                          <C>               <C>
                                                                     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-

</TABLE>

                                               5
<PAGE>


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
<PAGE>




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
<PAGE>

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
<PAGE>

      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
<PAGE
Critical Accounting Policies and Estimates
      There  have  been  no  material changes  in  our  critical
accounting  policies  or  critical  accounting  estimates  since
September  30,  2005, nor have we adopted an  accounting  policy
that  has  or  will  have a material impact on our  consolidated
financial  statements.  For further discussion of our accounting
policies  see  Footnote  1  "Summary of  Significant  Accounting
Policies" in this Quarterly Report on Form 10-QSB and the  Notes
to  Consolidated  Financial Statements in our Annual  Report  on
Form 10-KSB for the fiscal year ended September 30, 2005.
      The  accounting policies that reflect our more significant
estimates,  judgments and assumptions and which we  believe  are
the  most  critical to aid in fully understanding and evaluating
our reported financial results include the following:
Revenue Recognition
      Revenue  from sales of products is recognized at the  time
title and the risks and rewards of ownership pass. This is  when
the  products are shipped per customers' instructions, the sales
price  is fixed and determinable, and collections are reasonably
assured.

Valuation of Long-Lived Assets
      We assess the recoverability of long-lived assets whenever
we  determine  that events or changes in circumstances  indicate
that   their  carrying  amount  may  not  be  recoverable.   Our
assessment  is primarily based upon our estimate of future  cash
flows  associated  with these assets. These  valuations  contain
certain  assumptions  concerning estimated future  revenues  and
future  expenses. We have determined that there is no indication
of  impairment  of  any  of  our assets.   However,  should  our
operating  results deteriorate, we may determine that a  portion
of our long-lived assets is impaired. Such a determination could
result  in non-cash charges to income that could materially  and
adversely affect the Company's financial position or results  of
operations for that period.

Estimating Allowances for Doubtful Accounts Receivable
      We perform ongoing credit evaluations of our customers and
adjust  credit  limits  based  upon  payment  history  and   the
customer's  current  credit worthiness,  as  determined  by  our
review  of  their  current credit information.  We  continuously
monitor collections and payments from our customers and maintain
a   provision  for  estimated  credit  losses  based  upon   our
historical  experience  and  any  specific  customer  collection
issues  that  we have identified. While such credit losses  have
historically  been  minimal, within  our  expectations  and  the
provisions  established,  we  cannot  guarantee  that  we   will
continue to experience the same credit loss rates that  we  have
in  the past. A significant change in the liquidity or financial
position  of  any  of  our significant customers  could  have  a
material  adverse effect on the collectibility of  our  accounts
receivable and our future operating results.
Valuation of Deferred Tax Assets
      We  regularly evaluate our ability to recover the reported
amount of our deferred income taxes considering several factors,
including  our  estimate  of  the  likelihood  of  the   Company
generating sufficient taxable income in future years during  the
period  over which temporary differences reverse. Based  on  the
Company's  history of significant fluctuations in net  earnings,
the  Company  established  a  full  valuation  allowance  as  of
September  30, 2004 and prior due to the uncertainty as  to  the
realization  of certain net operating loss carryforwards.   With
the  asset  acquisition from Optometrics LLC in March 2005,  the
Company  now believes that some of these carryforwards  will  be
realized,  and has adjusted the valuation allowance  accordingly
as  outlined in the Company's Annual Report on Form  10-KSB  for
the fiscal year ended September 30, 2005.


                               10
<PAGE>
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


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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

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