UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC   20549

                              FORM 10-Q
(Mark One)

XX  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2009

    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 registrant as specified in its charter)

          Delaware                            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)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [x]   No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.

    Large accelerated filer [  ]       Accelerated filer         [  ]
    Non-accelerated filer   [  ]       Smaller reporting company [XX]

Indicate by check mark whether the registrant is a shell company
Yes [ ] No[x]

The Company had 12,520,390 shares of common stock, par value $.0005 per share,
outstanding as of February 8, 2010.

                                               1
<PAGE>
                   DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                                      INDEX

PART 1.   FINANCIAL INFORMATION                                       PAGE 3
                                                                      ------

  Item 1.   Financial Statements

            DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
            -----------------------------------------------

             CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009
             AND SEPTEMBER 30, 2009                                     3

             CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
             MONTHS ENDED DECEMBER 31, 2009 AND 2008                    5

             CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
             MONTHS ENDED DECEMBER 31, 2009 AND 2008                    6

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                 7


   Item 2.   Management's Discussion and Analysis of Financial         10
             Condition and Results of Operations.

   Item 3.   Quantitative and Qualitative Disclosures About            14
             Market Risk

   Item 4T.   Controls and Procedures                                  14


PART II.  OTHER INFORMATION                                            14

   Item 1.   Legal Proceedings                                         14

   Item 2.   Unregistered Sales of Equity Securities and Use           14
             of Proceeds

   Item 3.   Defaults Upon Senior Securities                           14

   Item 4.   Submission of Matters to a Vote of Security Holders       14

   Item 5.   Other Information                                         15

   Item 6.    Exhibits                                                 15

      Signatures                                                       16






                                               2
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                     ASSETS
<TABLE>
<S>                                                     <C>            <C>
                                                           December 31   September 30
                                                              2009           2009
                                                           (Unaudited)
                                                           ----------     ----------
Current assets
   Cash and cash equivalents                             $  2,212,093     $3,104,778
   Accounts receivable, net of allowance for doubtful
     accounts of $114,020 and $123,853 and sales
     returns of $23,405 and $18,916 for
     December 31, 2009 and
     September 30, 2009, respectively                       5,626,191      4,053,742
   Inventories                                              2,162,265      2,371,516
   Deferred tax asset                                         290,100        290,100
   Prepaid expenses and other current assets                  326,990        306,848
                                                           ----------     ----------
        Total current assets                               10,617,639     10,126,984

Property, Plant and Equipment, net                          2,676,642      2,744,724
Other Assets
   Intangibles, net                                         7,098,230      7,232,035
   Goodwill                                                11,054,396     11,054,396
   Deferred financing costs, net                               60,490         64,637
                                                           ----------     ----------
        Total other assets                                 18,213,116     18,351,068
                                                           ----------     ----------
        Total Assets                                      $31,507,397    $31,222,776
                                                           ==========     ==========
                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Current portion of long term debt                      $ 1,775,585     $1,749,524
   Note to a related party                                  2,000,000          -0-
   Accounts payable                                           880,472        773,837
   Accrued expenses and other current liabilities           1,291,324      1,111,342
   Income taxes payable                                       153,564        507,122
   Billings in excess of costs                                480,548         60,448
   Dividends payable                                          131,400        149,150
                                                           ----------     ----------
        Total current liabilities                           6,712,893      4,351,423
Long-term Liabilities
   Long-term debt, net                                      5,634,703      6,386,796
   Note payable to related party                                 -0-       2,000,000
                                                           ----------     ----------
   Total long-term liabilities                              5,634,703      8,386,796

Stockholders' Equity
   Common Stock, $.0005 par value, 40,000,000 shares
    authorized, 13,304,616 and 12,250,257 shares issued,
    12,494,456 and 11,440,097 shares outstanding                6,643          6,125

</TABLE>


                                               3
<PAGE>

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


<TABLE>
<S>                                                     <C>            <C>
   Preferred Stock, $.001 par value, 10,000,000
    Shares authorized, 5,256,000 and 5,966,000                  5,256          5,966
    shares   issued and outstanding for December 31,
    2009 and September 30, 2009, 10% cumulative,
    convertible
   Additional paid in capital                              16,592,163     16,364,388
   Retained earnings                                        3,564,956      3,094,420
                                                           ----------     ----------
                                                           20,169,018     19,470,899
   Deferred Compensation - Common Stock                       (22,875)         -0-
   Less 810,160 shares in treasury - at cost                 (986,342)      (986,342)
                                                           ----------     ----------
        Total stockholders' equity                         19,159,801     18,484,557
                                                           ----------     ----------
        Total Liabilities and Stockholders' Equity        $31,507,397    $31,222,776
                                                           ==========     ==========
</TABLE>



































                                               4
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
                                          Three Months Ended
                                             December 31
                                          2009         2008
                                       ----------    ---------
Net revenues                           $9,936,767   $8,767,275
Cost of revenues                        6,051,951    5,527,568
                                       ----------    ---------
Gross profit                            3,884,816    3,239,707
Selling, general and administrative
        expenses                        2,812,980    2,582,337
                                       ----------    ---------
Income from operations                  1,071,836      657,370

Interest expense, net                     162,441      186,797
                                       ----------    ---------
Income before income taxes                909,395      470,573
Income taxes                              295,626      114,934
                                       ----------    ---------
Net income                               $613,769     $355,639
                                       ==========    =========


Basic net income per common share          $0.04       $0.02
Diluted net income per common share        $0.04       $0.02


Weighted average shares outstanding
      Basic                           11,791,820    11,349,404
      Diluted                         11,968,319    12,328,159
























                                               5
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<S>                                                         <C>          <C>
                                                              Three Months Ended
                                                                 December 31
                                                                2009         2008
                                                              ----------  -----------
Cash flows from operating activities:
Net income                                                    $ 613,769   $ 355,639
Adjustments to reconcile net income to net cash used
    in operating activities:
       Stock compensation expense                                54,676      27,124
       Provision for doubtful accounts and sales returns         (5,345)     (9,156)
       Depreciation and amortization                            251,866     246,058
       (Increase) decrease in:
          Accounts receivable                                (1,567,102) (1,452,702)
          Inventories                                           209,250     445,327
          Prepaid expenses and other current assets             (47,690)    (31,754)
        Increase (decrease) in:
          Accounts payable and accrued expenses                 268,908    (660,765)
          Income taxes payable                                 (353,559)     15,723
          Billings in Excess of Cost                            420,100     536,224
                                                              ----------  -----------
Net cash used in operating activities                          (155,127)   (528,282)
                                                              ----------  -----------
Cash flows from investing activities:
     Purchases of property, plant and equipment                 (45,826)   (147,648)
                                                              ----------  -----------
     Net cash used in investing activities                      (45,826)   (147,648)
                                                              ----------  -----------
Cash flows from financing activities:
     Issuance of common stock                                   177,533      39,218
     Repayment of long-term debt                               (726,032)   (486,929)
     Repayment of short-term debt                                   -0-    (400,366)
     Deferred financing costs incurred                              -0-       6,139
     Preferred stock dividends paid                            (143,233)   (149,150)
                                                              ----------  -----------
----------
Net cash used in financing activities                          (691,732)   (991,088)
                                                              ----------  -----------
Net decrease in cash and cash equivalents                      (892,685) (1,667,018)
Cash and cash equivalents, beginning                          3,104,778   3,882,955
                                                              ----------  -----------
Cash and cash equivalents, ending                            $2,212,093  $2,215,937
                                                             ===========  ===========

</TABLE>







                                               6
<PAGE>

DYNASIL CORPORATION OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 - Basis of Presentation

The consolidated balance sheet as of September 30, 2009 was audited and
appears in the Form 10-K previously filed by the Company.  The consolidated
balance sheet as of December 31, 2009 and the consolidated statements of
operations and cash flows for the three months ended December 31, 2009 and
2008, 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 December 31, 2009 and for all
periods presented have been made.  Interim operating results are not
necessarily indicative of operating results for a full year.

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, 2009 Annual Report on Form 10-K previously filed by the Company with the
Securities and Exchange Commission.

Reclassifications

Certain amounts as previously reported have been reclassified to conform to
the current year financial statement presentation.

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
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:

                             December 31, 2009      September 30, 2009
                             -----------------      ------------------
        Raw Materials               $1,473,290           $1,374,134
        Work-in-Process                417,279              550,151
        Finished Goods                 271,696              447,231
                             -----------------      ------------------
                                    $2,162,265           $2,371,516
                             =================      ==================

Note 3 - Billings in Excess of Costs

Billings in Excess of Costs relates to research and development contracts and
consists of billings at provisional contract rates less actual costs plus
fees.






                                               7
<PAGE>

Note 4 - Net Income Per Share

Basic net income per common share is computed by dividing the net income
applicable to common
shares after preferred stock dividend requirements, if applicable, by the
weighted average number

of common shares outstanding during each period.  Diluted net income per
common share adjusts basic earnings per share for the effects of common stock
options, convertible preferred stock and other potential dilutive common
shares outstanding during the periods.

For purposes of computing diluted earnings per share, 176,499 and 978,755
common share equivalents were assumed to be outstanding for the quarters ended
December 31, 2009 and 2008, respectively.  The effect of assumed conversion of
the Series C Preferred Stock into 2,102,400 common shares, as well as certain
stock options, was antidilutive and therefore excluded from the computations.
The computation of basic and diluted net income per common share is as
follows:

    Calculation of Net Income for Basic Earnings per Share

                                       December 31, 2009      December 31, 2008
                                       -----------------      -----------------
    Net income                             $ 613,769          $   355,639

    Less:  Preferred stock dividends       $(143,233)            (149,150)
                                       -----------------      -----------------
    Income allocable to
       common shareholders                 $ 470,536          $   206,489


    Calculation of Net Income for Diluted Earnings per Share

                                       December 31, 2009      December 31, 2008
                                       -----------------      -----------------
    Net income                             $ 613,769          $   355,639

    Less:  Preferred stock dividends       $(143,233)            (131,400)
                                       -----------------      -----------------
    Net Income for Dilutive
       Earnings per Share                  $ 470,536          $   224,239

    Weighted average shares outstanding December 31, 2009     December 31, 2008

     Basic                                 11,791,820           11,349,404
     Effect of dilutive securities
       Stock Options                          176,499               34,455
       Convertible Preferred Stock              -0-                944,300
                                       -----------------      -----------------
     Diluted average shares outstanding    11,968,319           12,328,159

Note 5 - Stock Based Compensation

The fair value of the stock options granted was estimated at the date of grant
using the Black-Scholes options pricing model.  The list of assumptions used
for the Black-Scholes option pricing model is presented below with numbers
shown for the most recent grant:

                                November 30, 2009
Expected term in years             3 years
Risk-free interest rate            4.12%
Expected volatility               60.75%
Expected dividend yield            0.00%


                                               8
<PAGE>

The expected volatility was determined with reference to the historical
volatility of the Company's stock.  The expected term of options
granted represents the period of time for which the options have
been granted.  The risk-free interest rate for periods within the
contractual life of the option is based on the U.S.Treasury rate in
effect at the time of grant. During the three months ended
December 31, 2009, 570,000 stock options were granted at prices
ranging from $3.19 to $4.06 per share and 81,966 stock
options were exercised.  Of the granted stock options, 550,000 vest quarterly
beginning in January 2010.  The remaining 20,000 stock options granted do not
vest until 2011.  As a result, the stock-based compensation expense totaling
$268,565 will be recognized at that time if they become exercisable.  Of the
options exercised, 80,000 had an exercise price of $2.00 per share with
$160,000 paid in cash.  The remaining 1,966 stock options exercised had an
exercise price of $0.60 per share with $1,179.60 paid in cash. For three
months ended December 31, 2009, total stock-based compensation charged to
operations totaled $54,676 consisting of $1,418 from previously granted
options that vested during this period, $27,501 from Director stock options,
and $25,757 for stock grants.  At December 31, 2009, there was approximately
$331,661 of total unrecognized compensation expense related to non-exercisable
option-based compensation arrangements under the Plan. The Company cancelled
20,000 options during the three months ended December 31, 2009.  Compensation
expense relating to the stock grants during the three months ended December
31, 2009 of $25,757, comprised of 6,200 shares granted at $2.80, 300 shares
granted at $2.99 and 3,769 shares granted at $1.99 per share.

Note 6 - Equity

As part of the July 1, 2008 acquisition of specific assets of RMD Instruments,
LLC, the Company issued one million Dynasil common stock shares as part of the
purchase price. The Seller's members may tender the shares of the acquisition
stock to Dynasil for repurchase by it at a repurchase price of $2.00 per share
during a two year period starting July 1, 2010, upon no less than ninety (90)
days prior notice to the Company.

On November 30, 2009, Dynasil issued an aggregate of 946,431 shares of its
Common Stock, $.0005 par value per share, as a result of the exercise of the
conversion rights by holders of 710,000 shares of its Series B 10% Cumulative
Convertible Preferred Stock (the "Series B Preferred Shares"). Dynasil had
previously called all of the Series B Preferred Shares for redemption on
November 30, 2009. 100% of the Series B preferred stock was converted to
common stock which eliminates dividend payments of $71,000 on an annual basis.

Note 7 - Segment Reporting

Dynasil's business breaks down into two segments: optics/photonics products
and instruments and contract research.  Within these segments, there is a
segregation of reportable units based upon the organizational structure used
to evaluate performance and make decisions on resource allocation, as well as
availability and materiality of separate financial results consistent with
that structure.  The optics/photonics products and instruments segment
manufactures optical materials, components, coatings and specialized
instruments used in various applications in the medical, industrial, and
homeland security/defense sectors.  Our contract research segment is one of
the largest small business participants in U.S. government-funded research.












                                               9
<PAGE>

Segment Financial Information
                                           Three Months Ended December 31
Segment                                    2009                        2008
--------                                  -----                       -----
Contract Research
   Revenues                            $ 6,008,917                 $ 4,956,957
   Income from Operations                  620,047                     460,876
   Income as a percent of sales             10.3%                        9.3%
Photonics Products and Instruments
   Revenues                            $ 3,927,850                 $ 3,810,418
   Income from Operations                  451,789                     196,494
   Income as a percent of sales             11.5%                        5.2%
Total
   Revenues                            $ 9,936,767                 $ 8,767,275
   Income from Operations                1,071,856                     657,370
   Income as a percent of sales             10.8%                        7.5%

Note 8 - Income Taxes

The FASB's guidance on income taxes requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on differing
treatment of items for financial reporting and income tax reporting purposes.
The deferred tax balances are adjusted to reflect tax rates by tax
jurisdiction, based on currently enacted tax laws, which will be in effect in
the years in which the temporary differences are expected to reverse. We have
provided deferred income tax benefits on net operating loss carry-forwards to
the extent we believe we will be able to utilize them in future tax filings.

The FASB's guidance also prescribes a comprehensive model for how a company
should measure, recognize, present, and disclose in its financial statements
uncertain tax positions that the company has taken or expects to take on a tax
return.  The Company recognizes the tax benefits from uncertain tax positions
only if it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position.  The tax benefits recognized in the financial statements from such
positions are measured based on the largest benefit that has a greater than
50% likelihood of being realized upon ultimate settlement.  Interest and
penalties, if incurred, are included in interest and financing expense.  The
Company's income tax filings are subject to audit by various taxing
authorities.  The Company's open audit periods are 2005 - 2008.  There are no
material uncertain positions.

Note 9 - Subsequent Events

The Company has performed an evaluation of subsequent events through February
16, 2010, which is the date the financial statements were issued.

Dynasil's Line of Credit of $1,000,000 with Susquehanna Bank has been extended
to April 30, 2010.  The interest rate on the Line of Credit was changed from
the bank's prime commercial rate of interest with no minimum rate to the
bank's prime rate of interest with a minimum interest rate of 4%.  As of
2/16/10 and 12/31/09, the entire $1,000,000 Line of Credit was available for
Company use.  The Company is currently in discussions to increase and renew
the Line of Credit.





                                               10
<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis should be read in
conjunction with our financial statements and the notes thereto in the Dynasil
Corporation of America ("Dynasil", the "Company" or "we") Form 10-K for the
fiscal year ending September 30, 2009.

General Business Overview

Revenues for the first quarter of fiscal year 2009 which ended December 31,
2009 were $9.9 million, an increase of 13.3% over revenues of $8.8 million for
the quarter ended December 31, 2008.  Income from Operations for the quarter
was $1.07 million, an increase of 63% over Income from Operations of $0.66
million for the quarter ended December 31, 2008.  Net income for the quarter
was $613,769 or $0.04 per share, compared with a net income of $355,639, or
$0.02 per share, for the quarter ended December 31, 2008.  The gains in
profitability were primarily driven by the 13.3% revenue increase as well as
improved profitability for our Optics/Photonics Products and Instruments
Segment ("Products and Instruments").

Overall, our Contract Research Segment ("Contract Research") continues to grow
as interest in our unique research capabilities has increased.  In addition,
we have been experiencing moderate revenue improvement in our Products and
Instruments segment which is translating into higher operating margins given
the cost reductions implemented over the last year.  We continue to focus on
the commercialization of our extensive technology portfolio and have increased
our acquisition activities.

Results of Operations

Revenue for the three months ended December 31, 2009 was $9,936,767, a 13.3%
increase from $8,767,275 for the three months ended December 31, 2008.  The
revenue increase was driven by a 21.1% Contract Research increase and a 3.1%
Products and Instruments increase. We continue to be successful at winning
Contract Research projects and management is seeing a modest rebound in
shipments and orders for Products and Instruments.

Gross profit for the three months ended December 31, 2009 was $3,884,816, or
39.1% of sales, a 19.9% increase from $3,239,707, or 37.0% of sales for the
three months ended December 31, 2008.  The largest drivers of the gross profit
percentage improvement were the revenue mix change arising from a large
Contract Research revenue increase and cost reductions and efficiency
improvements over the last twelve months which improved gross margin
percentages for Products and Instruments.

Selling, general and administrative ("SG&A") expenses for the three months
ended December
31, 2009, were $2,812,980 or 28.3% of sales, a decrease of 1.2 percentage
points from the three months ended December 31, 2008 of $2,582,337 or 29.5% of
sales. The largest driver for the SG&A percentage improvement was the cost
savings implemented for Products and Instruments over the last twelve months.

Income from Operations for the three months ended December 31, 2009 was
$1,071,836, an increase of 63% over Income from Operations of $657,370 for the
quarter ended December 31, 2008.  The increased Income from Operations was
driven primarily by increased revenues coupled with the continued management
focus on cost reductions and the lowering of the overall cost structure over
the last year.

Net interest expense for the three months ended December 31, 2009, was
$162,441, compared to $186,797 for the three months ended December 31, 2008.
The decrease in combined interest

                                               11
<PAGE>

expense was impacted by the repayment of $2.9 million of debt since September
30, 2008 which includes $0.7 million which was repaid during the quarter
ending December 31, 2009.

Net income for the three months ended December 31, 2009, was $613,769 or $0.04
in basic earnings per share, which is up 72% from net income for the three
months ended December 31 2008, of $355,639, or $0.02 in basic earnings per
share.  When compared to the quarter ended December 31, 2008, net income was
primarily driven by improved operating results.

The Company had a $295,626 provision for income taxes for the quarter ended
December 31, 2009 and a $114,934 provision for the quarter ended December 31,
2008.   The tax provision is higher due to increased net income results.

Liquidity and Capital Resources

Cash decreased by $892,685 for the three months ended December 31, 2009 to
$2,212,093.  The primary sources of cash were net income of $613,769,
depreciation and amortization expenses that aggregated to $251,866, inventory
reductions of $209,250, accounts payable/accrued expense increase of $268,908,
billings in excess of costs increase of $420,100, and issuance of common stock
of $177,533.  Accounts receivable was the largest use of cash with an increase
of $1,567,102, coming primarily from Contract Research which was driven by
higher revenues and several large customer payments that arrived after
December 31, 2009.  A second large cash use was the repayment on long term
debt in the amount of $726,032.  Payments on long term debt included the
monthly payments on term and mortgage debt of $426,032.  In addition, a
mandatory principal repayment of $300,000 was made to Susquehanna Bank based
on the earning recapture in terms and conditions contained in the Term Loan
and Line of Credit Loan Agreement dated July 1, 2008 (the "Term Loan
Agreement").  Also, income taxes payable were reduced by $353,559.

Management believes that its current cash and cash equivalent balances, along
with the net cash generated by operations and credit lines, are sufficient to
meet its anticipated cash needs for working capital for at least the next 12
months.  As of December 31, 2009, the Company had cash of $2.2 million and
available bank line of credit borrowings of $1 million, which management is
currently in discussions to extend beyond April 30, 2010.  The inability to
extend the bank line of credit could cause a cash shortage, although the line
is not currently utilized.  In addition, a reoccurring worldwide economic slow-
down could significantly impact the Company's revenues and profits so that a
returning recession could cause a cash shortage.  The Company has a $2 million
note payable to RMD Instruments, LLC which is scheduled to be repaid by
October 1, 2010 and the 1,000,000 share stock repurchase which is explained in
Note 6 to the financial statements in this 10-Q.  Also, depending on its
fiscal 2010 net income, the Company may be required to repay Susquehanna Bank
during fiscal year 2010 up to $500,000 under the Term Loan Agreement. There
are currently plans for customary capital expenditures which would most likely
be funded out of operating cash flow.  Any major business expansions or
acquisitions likely will require the Company to seek additional debt and/or
equity financing.

Acquisitions

We continue to execute our strategy of significant growth through acquisitions
as well as
organic growth and effective execution in our businesses.  The acquisition of
Radiation Monitoring Devices, Inc. ("RMD Research") and specific assets of RMD
Instruments, LLC ("RMD Instruments" on July 1, 2008 (collectively, "RMD") had
a transformational impact on Dynasil with a tripling of revenues as well as
significantly increasing our technical capabilities and intellectual property.
Management has now essentially completed the planned integration of RMD and is
focused on commercialization of RMD technology either internally or through
acquisitions.  Therefore, the Company has recently refocused on seeking
possible acquisitions.


                                               12
<PAGE>

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies or
critical accounting estimates since September 30, 2009.  We have not adopted
any accounting policies since September 30, 2009 that have or will have a
material impact on our consolidated financial statements.  For further
discussion of our accounting policies see the "Summary of Significant
Accounting Policies" in the Notes to Consolidated Financial Statements in our
Annual Report on Form 10-K for the fiscal year ended September 30, 2009 as
well as the notes in this Form 10-Q.

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.  Revenues from research and development
activities consist of up-front fees, research and development funding and
milestone payments.  Periodic payments for research and development activities
and government grants are recognized over the period that the Company performs
the related activities under the terms of the agreements.

Government funded services revenue from cost plus contracts are recognized as
costs are incurred on the basis of direct costs plus allowable indirect costs
and an allocable portion of the contracts' fixed fees.  Revenues from fixed-
type contracts are recognized under the percentage of completion method with
estimated costs and profits included in contract revenue as work is performed.
Revenues from time and materials contracts are recognized as costs are
incurred at amounts represented by agreed billing amounts.  Recognition of
losses on projects is taken as soon as the loss is reasonably determinable.
The Company has no current accrual provision for potential losses on existing
research projects based on Management expectations as well as historical
experience.

The majority of the Companies' contract revenue is derived from the United
States government and government related contracts.  Such contracts have
certain risks which include dependence on future appropriations and
administrative allotment of funds and changes in government policies.  Costs
incurred under United States government contracts are subject to audit.  The
Companies believe that the results of such audits will not have a material
adverse effect on its financial position or its results of operations.

Valuation of Long-Lived Assets, Intangible Assets and Goodwill

We assess the impairment of long-lived assets, intangible assets and goodwill
whenever events or changes in circumstances indicate that the carrying value
of such assets may not be fully recoverable or that their useful lives are no
longer appropriate.  Reviews are performed to determine whether the carrying
values of the assets are impaired based on comparison to the discounted
expected future cash flows identifiable to such long-lived and amortizable
intangible assets.  If the comparison indicates that impairment exists, the
impaired asset is written down to its fair value.  We have determined that
there is no indication of material impairment to our long-lived and intangible
assets.  Goodwill is tested for impairment on an annual basis and between
annual tests in certain circumstances, and written down when impaired.  No
impairment of goodwill was identified based on the annual impairment review
during the fourth quarter of fiscal year 2009.



                                               13
<PAGE>

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
collectability of our accounts receivable and our future operating results.

Stock-Based Compensation

We account for stock-based compensation using fair value.  Compensation costs
are recognized for stock options granted to employees and directors.  Options
and warrants granted to employees and non-employees are recorded as an expense
at the date of grant based on the then estimated fair value of the security in
question, determined using the Black-Scholes option pricing model.

Income Taxes

As part of the process of preparing our consolidated financial statements, we
are required to estimate our income tax provision (benefit) in each of the
jurisdictions in which we operate.  This process involves estimating our
current income tax provision (benefit) together with assessing temporary
differences resulting from differing treatment of items for tax and accounting
purposes.  These differences result in deferred tax assets and liabilities,
which are included within our consolidated balance sheets.  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.  The Company believes that
these carryforwards will be realized, and has adjusted the valuation allowance
accordingly.

New Accounting Standards

Recently Adopted Standards

In June 2008, the Financial Accounting Standards Board ("FASB") issued certain
provisions of Accounting Standards Codification ("ASC") 260, "Earnings per
Share", which state that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether paid or
unpaid) are participating securities and are to be included in the computation
of earnings per share under the two-class method as described in ASC 260.
These provisions were effective for fiscal years beginning after December 15,
2008 (October 1, 2009 for the Company) with early adoption prohibited. These
provisions require all presented prior-period earnings per share data to be
adjusted. The Company adopted ASC 260, as of October 1, 2009. The adoption of
these provisions did not have a material effect on the consolidated financial
statements.

Recently Issued Accounting Standards

In August 2009, the FASB issued changes to measuring liabilities at fair
value. The standard changes provide clarification that in circumstances in
which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure

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<PAGE>

fair value of such liability using one or more of the techniques prescribed by
the update. These changes were effective for the Company on October 1, 2009.
The adoption of this standard did not have an impact on the Company's
consolidated financial statements.

 In September 2009, the FASB issued authoritative guidance on revenue
arrangements with multiple deliverables. This guidance provides another
alternative for establishing fair value for a deliverable. When vendor
specific objective evidence or third-party evidence for deliverables in an
arrangement cannot be determined, companies will be required to develop a best
estimate of the selling price for separate deliverables and allocate
arrangement consideration using the relative selling price method. This
guidance is effective October 1, 2010, and early adoption is permitted. The
Company is currently evaluating the potential impact of this guidance on its
financial position and results of operations.

In January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires new disclosures on the transfers of assets and liabilities between
Level 1 (quoted prices in active market for identical assets or liabilities)
and Level 2 (significant other observable inputs) of the fair value
measurement hierarchy, including the reasons and the timing of the transfers.
Additionally, the guidance requires a roll forward of activities on purchases,
sales, issuance, and settlements of the assets and liabilities measured using
significant unobservable inputs (Level 3 fair value measurements). The
guidance will be effective for interim and annual reporting periods beginning
after December 15, 2009. The Company does not expect the adoption of this
guidance will have a material effect on its consolidated financial statements.

Forward-Looking Statements

The statements contained in this Quarterly Report on Form 10-Q which are not
historical facts, including, but not limited to, certain statements found
under the captions "Description of Business," "General Business Overview,"
"Results of Operations," "Dynasil's Strategy," 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-Q, including, without limitation, the portions of
such reports under the captions referenced above, and the uncertainties set
forth from time to time in the Company's 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,
consumer acceptance of new products, general economic conditions, consumer
trends, costs and availability of raw materials and management information
systems, competition, litigation and the effect of governmental regulation.
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    Quantitative and Qualitative Disclosures About Market Risk.

Dynasil, as a smaller reporting company, is not required to complete this
item.

ITEM 4T    Controls and Procedures

As required by Rule 13a-15(e) under the Exchange Act, our Chief Executive
Officer and Chief Financial Officer and Chief Accounting Officer have
evaluated our disclosure controls and
procedures as of the end of the period covered by the report and have
determined that such disclosure controls and procedures are effective.

                                               15
<PAGE>

There has been no change in our internal control over financial reporting in
connection with this evaluation that occurred during our last fiscal quarter
that materially affected, or it is reasonably likely to materially affect, our
internal control over financial reporting.

PART II

OTHER INFORMATION
------------------

ITEM 1    Legal Proceedings

On or about May 6, 2008, the Company's EMF subsidiary ("EMF") received a
Summons with Notice (the "Summons") filed on January 18, 2008 in the Supreme
Court of the State of New York, County of Albany, by the New York State
Attorney General on behalf of the State of New York Workers' Compensation
Board (the "Board"), as plaintiff. The Summons required EMF, which is one of a
large number of defendants, to appear in the action commenced by the Board
alleging its entitlement to recover previously billed and unpaid assessments
aggregating approximately $1 million and other, but as then undetermined,
assessments that in the aggregate may exceed $19 million from the defendants
based upon their participation on a joint and several liability basis in a
Manufacturing Self Insurance Trust that terminated on or about August 31,
2007. In order to minimize further legal expenditures, EMF has accepted a
settlement offer from the State that calls for EMF to pay $22,704.33.  The
settlement offer is contingent upon the State obtaining enough acceptances
from other plaintiffs to close out the case. Although the action is not fully
resolved, EMF has a reserve equal to the proposed settlement and believes that
its ultimate liability in this matter will not have a material adverse effect
on its financial condition.

ITEM 2    Unregistered Sales of Equity Securities and Use of Proceeds

     NONE

ITEM 3    Defaults Upon Senior Securities

     NONE

ITEM 4    Submission of Matters to a Vote of Security Holders

     Dynasil's annual meeting of stockholders was held on February 3, 2010.
At the meeting 11,051,106 of the outstanding shares of common stock were
present by proxy or in person, representing 89.11% of shares eligible to vote.
The slate of seven (7) nominees for the Director positions was an increase of
two (2) positions, primarily designed to broaden the business experience on
the Board and to increase the number of independent directors available to
serve on corporate governance committees, to help the Company get positioned
for a potential move to the NASDAQ Exchange within the next one to two years.
The seven (7) nominees for director were elected:  Peter Sulick, James
Saltzman, Craig Dunham, Cecil Ursprung, Gerald Entine, Michael Joyner and
David Kronfeld.  Each nominee for director received at least 8,320,311 of the
shares voted for his election and, no more than 86,630 shares were withheld,
resulting in each nominee receiving at least 99.0% of the favorable votes.
The persons elected as directors included two new directors: Dr. Michael
Joyner, Associate Dean for Research at Mayo Clinic, and Mr. David Kronfeld,
founder of the venture capital firm JK&B Capital.  The stockholders also
approved the 2010 Stock Incentive Plan to replace the expired 1999 Stock
Incentive Plan by the vote of 8,221,367 in favor, 138,584 against and 17,040
abstaining.  The stockholders also ratified the appointment of Haefele,
Flanagan & Company p.c. as the Company's independent public accountants for
the 2010 fiscal year by the vote of 11,009,851 shares in favor, 13,297 against
and 27,958 abstaining.

                                               16
<PAGE>

ITEM 5    Other Information

      NONE

ITEM 6    Exhibits

     (a) Exhibits and index of Exhibits

        10.1 Line of Credit Extension (Change in Terms Agreement) with
        Susquehanna Bank extending the Line of Credit maturity on the
        $1,000,000 Line of Credit from January 31, 2010 to April 30, 2010
        and changing the interest rate to a floor rate of 4.0%.

        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 February 16, 2010 issued by Dynasil
        Corporation of America announcing its financial results for
        the first quarter ending December 31, 2009.


     (b) Reports on Form 8-K

        On November 30, 2009, a current report on Form 8-K for Items 3.02,
        5.02, 8.01 and 9.01 reporting that Dynasil had issued an aggregate
        of 946,431 shares of its Common Stock, as a result of the exercise
        of the conversion rights by holders of 710,000 shares of
        its Series B 10% Cumulative Convertible Preferred Stock and had named
        Mr. Richard A. Johnson as Chief Financial Officer of Dynasil.

        On December 7, 2009, a current report on Form 8-K for Item 8.01
        announcing the slate of Directors to be on the ballot at the
        February 3, 2010 Annual Meeting.
























                                               17
<PAGE>

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: February 16, 2010
  ---------------------------------   --------------------
          Craig T. Dunham,
          President and CEO


     /s/ Richard A. Johnson          DATED: February 16, 2010
  ---------------------------------   --------------------
         Richard A. Johnson,
         Chief Financial Officer





































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