|   | Contact:Patty      KeheDynasil      Corporation of AmericaPhone:      (607) 272-3320, ext. 26Email:  pkehe@dynasilcorp.com |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

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| Dynasil      Corporation of America and Subsidiaries |   |   |   |
|------------------------------------------------------|--------|--------|--------|
| Consolidated      Balance Sheets                     |   |   |   |

|                                                                                                                                                         |   | 31-Dec      |       |   | 30-Sep |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|------------|--------|--------|--------|
|                                                                                                                                                         |   | 2010        |       |   | 2010   |   |
|                                                                                                                                                              |   | (Unaudited) |       |   |   |   |
| ASSETS                                                                                                                                                       |   |        |       |   |   |   |
| Current      assets                                                                                                                                          |   |        |       |   |   |   |
|    Cash      and cash equivalents                                                                                                             |   | $           | 2,624,189  |   |   | $      | 4,111,966 |   |
|    Accounts      receivable, net                                                                                                              |   |        | 6,849,724  |   |   |   | 6,360,583 |   |
|    Inventories                                                                                                                                |   |        | 3,303,816  |   |   |   | 3,097,219 |   |
| Cost      in excess of billings                                                                                                                              |   |        | 460,724    |   |   |   | 135,157 |   |
| Prepaid      income taxes                                                                                                                                    |   |        | 480,031    |   |   |   | 410,045 |   |
| Prepaid      expenses and other current assets                                                                                                               |   |        | 440,307    |   |   |   | 453,418 |   |
|                      Total      current assets      |   |        | 14,158,791 |   |   |   | 14,568,388 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| Property,      Plant and Equipment, net                                                                                                                      |   |        | 3,882,136  |   |   |   | 3,953,319 |   |
| Other      Assets                                                                                                                                            |   |        |       |   |   |   |   |   |
|    Intangibles,      net                                                                                                                      |   |        | 6,521,944  |   |   |   | 6,671,149 |   |
|    Goodwill                                                                                                                                   |   |        | 13,591,287 |   |   |   | 13,591,287 |   |
|    Deferred      financing costs, net                                                                                                         |   |        | 180,590    |   |   |   | 190,568 |   |
|                      Total      other assets        |   |        | 20,293,821 |   |   |   | 20,453,004 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
|                      Total      Assets              |   | $           | 38,334,748 |   |   | $      | 38,974,711 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                    |   |        |       |   |   |   |   |   |
| Current      Liabilities                                                                                                                                     |   |        |       |   |   |   |   |   |
|    Current      portion of long-term debt                                                                                                     |   | $           | 1,870,779  |   |   | $      | 1,870,779 |   |
|    Accounts      payable                                                                                                                      |   |        | 1,047,100  |   |   |   | 1,482,250 |   |
|    Accrued      expenses and other liabilities                                                                                                |   |        | 1,546,197  |   |   |   | 1,823,222 |   |
|    Deferred      tax liability                                                                                                                |   |        | 69,538     |   |   |   | 91,100 |   |
|    Dividends      payable                                                                                                                     |   |        | 131,400    |   |   |   | 131,400 |   |
|                      Total      current liabilities |   |        | 4,665,014  |   |   |   | 5,398,751 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| Long-term      Liabilities                                                                                                                                   |   |        |       |   |   |   |   |   |
|    Long-term      debt, net                                                                                                                   |   |        | 10,368,298 |   |   |   | 10,833,334 |   |
|    Contingent      consideration                                                                                                              |   |        | 750,000    |   |   |   | 750,000 |   |
|                     Total      long-term liabilities     |   |        | 11,118,298 |   |   |   | 11,583,334 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| Temporary      Equity                                                                                                                                        |   |        | 2,000,000  |   |   |   | 2,000,000 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| Stockholders'      Equity                                                                                                                                    |   |        | 20,551,436 |   |   |   | 19,992,626 |   |
|                                                                                                                                                         |   |        |       |   |   |   |   |   |
| Total      Liabilities and Stockholders' Equity                                                                                                              |   | $           | 38,334,748 |   |   | $      | 38,974,711 |   |

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|                                              |   | Three      Months Ended |       |
|---------------------------------------------------|--------|-------------------------|------------|
|                                              |   | December      31        |       |
|                                              |   | 2010                    |       |   | 2009 |   |
| Net      revenue                                  |   | $                       | 11,626,507 |   |   | $ | 9,936,767 |   |
| Cost      of revenue                              |   |                    | 6,719,783  |   |   |   | 6,051,951 |   |
| Gross      profit                                 |   |                    | 4,906,724  |   |   |   | 3,884,816 |   |
| Selling,      general and administrative expenses |   |                    | 4,171,010  |   |   |   | 2,812,980 |   |
| Income      from operations                       |   |                    | 735,714    |   |   |   | 1,071,836 |   |
| Interest      expense, net                        |   |                    | 158,196    |   |   |   | 162,441 |   |
| Income      before income taxes                   |   |                    | 577,518    |   |   |   | 909,395 |   |
| Income      taxes                                 |   |                    | 202,341    |   |   |   | 295,626 |   |
| Net      income                                   |   | $                       | 375,177    |   |   | $ | 613,769 |   |

| Earnings per Share                                                        |   |   |       |   |   |   |       |   |
|---------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
| Net      income                                                           |   | $      | 375,177    |   |   | $      | 613,769    |   |
| Dividends      on preferred stock                                         |   |   | 131,400    |   |   |   | 143,233    |   |
| Net      income applicable to common stockholders                         |   |   | 243,777    |   |   |   | 470,536    |   |
| Dividend      add back due to assumed preferred stock conversion          |   |   | 131,400    |   |   |   | -0-        |   |
| Net      income for diluted income per common share                       |   | $      | 375,177    |   |   | $      | 470,536    |   |
|                                                                      |   |   |       |   |   |   |       |   |
| Basic      net income per common share                                    |   | $      | 0.03       |   |   | $      | 0.04       |   |
| Diluted      net income per common share                                  |   | $      | 0.02       |   |   | $      | 0.04       |   |
|                                                                      |   |   |       |   |   |   |       |   |
| Weighted      average shares outstanding                                  |   |   |       |   |   |   |       |   |
|            Basic   |   |   | 12,979,939 |   |   |   | 11,791,820 |   |
|            Diluted |   |   | 15,497,495 |   |   |   | 11,968,319 |   |

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