UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC   20549

                              FORM 10-KSB
(Mark One)

[x] ANNUAL REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 for the fiscal year ended September 30, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT 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 of                       (I.R.S. Employer
 Incorporation or Organization)                        Identification No.)

385 Cooper Road, West Berlin, New Jersey                        08091
(Address of Principal Executive Offices)                      (Zip Code)

                              (856) 767-4600
                        (Issuer's Telephone Number)

Securities registered under Section 12(b) of the Act: none

Securities registered under Section 12(g) of the Act: common stock, $.0005
par value

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [x]     No [ ]

Check if there is no disclosure of delinquent filers in response to item 405
of Regulation S-B contained in this form, and that no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form
10-KSB or any amendment to this Form 10-KSB [X]

State issuer's revenues for its most recent fiscal year: $4,894,094

The Company's common stock is quoted on the NASDAQ OTC Bulletin Board under
the symbol "DYSL".   The estimated aggregate market value of the voting and
non-voting stock held by non-affiliates of the registrant as of November 30,
2001 was $1,293,150. The market value is based upon the last sale of the
Common Stock on the NASDAQ OTC Bulletin Board of $.90 per share on November
30, 2001.

The Company had 2,391,603 shares of common stock, par value $.0005 per share,
outstanding as of November 30, 2001.

Documents incorporated by reference: none

Transitional Small Business Disclosure:     Yes       No  XX
                                                ----     -----

                                  PART I

ITEM 1.  DESCRIPTION OF BUSINESS


     Dynasil Corporation of America ("Dynasil", "we", or the "Company") was
incorporated in the State of New Jersey on October 20, 1960.

     On April 22, 1996, the Company's articles of incorporation were amended
to reflect an increase in the authorized shares of common stock from
1,500,000 to 25,000,000, and a reduction of the par value of the common stock
from $.10 to $.001. On June 1, 1996, the Board of Directors declared a
three-for-two stock split, effected in the form of a 50% stock dividend
payable to stockholders of record on April 30, 1996.

     On October 16, 1996, the Board of Directors declared a two-for-one
stock split payable on November 1, 1996 to stockholders of record on October
1, 1996, which split further reduced the par value of our common stock from
$.001 to $.0005 per share.

     We are primarily engaged in the manufacturing and marketing of
customized synthetic fused silica products. We also distribute fused quartz
material that we obtain from a variety of sources. Our products are used
primarily as components of optical instruments, lasers, analytical
instruments, semiconductor/electronic devices, spacecraft/aircraft
components, and in devices for the energy industry. These include:

          o    Optical components - lenses, prisms, reflectors, mirrors,
               filters, optical flats

          o    Lasers - Beam Splitters, brewster windows, q-switches,
               medical/industrial lasers, exciter systems

          o    Analytical Instruments - UV spectrophotometer cells, fire
               control devices, reticle substrates, and interferometer plates

          o    Energy - Laser/Tkamak fusion research isotope separation,solar
               cell covers

          o    Semiconductor/Electronic - Microcircuit substrates, microwave
               devices, photomasks, sputter plates, microlithography optics

          o    Spacecraft/Aircraft - Docking light covers, windows, re-entry
               heat shields, ring laser gyros

     We have a two person sales force located in our corporate headquarters,
West Berlin, New Jersey that handles all domestic sales. We also use
manufacture representatives in various foreign countries for international
sales. Marketing efforts include direct customer contact through sales
visits, advertising in trade publications and presentations at trade shows.
Our
products are distributed through direct sales and delivered by commercial
carriers.

     We compete for business in the optics industry primarily with two other
manufacturers of synthetic fused silica and several distributors of their
products. The manufacturers are Corning Incorporated, Canton, NY and Heraeus
Quarzglas, Germany.  Our principal competitive distributors include United
Lens Company, Inc., Southbridge, MA, Advanced Glass Industries, Rochester, NY
and Glass Fab, Inc., Rochester NY. We also purchase material from Corning
Incorporated to supplement our in house inventory and enabling us to offer a
wider variety of products.

     Market share in the optics industry is largely a function of quality,
price and speed of delivery.  We believe that we have always been competitive
in all three areas. We have significantly improved our delivery times over
the past year as a result of improved product flow.

      The primary raw material used in our manufacturing process is silicon
tetrachloride, which we obtain from Wah Chang, an Allegheny Technologies
Company. In the event we are unable to obtain silicon tetrachloride from our
current supplier, it is available from Dow Chemical or Hemlock, Inc. at
comparable prices.


     We presently have over 150 customers, with approximately 90% of our
business being concentrated in our top 40 customers. Our five largest
customers each accounted for approximately 7.4%, 5.7%, 4.8%, 4.6% and 4.3%
respectively, of our revenues during fiscal year 2001. Generally, our
customers provide purchase orders for a specific quantity and quality of
fused silica. These purchase orders generally are filled with fused silica
from inventory or manufacture to order. Orders are generally filled over a
period ranging from one week to one year. The loss of any of these customers
would likely have a material adverse effect on our business, financial
condition and results of operations.

    We rely on trade secret and copyright laws to protect our proprietary
technologies, but there can be no assurance that those laws will provide us
with sufficient protection, that others will not develop technologies that
are similar or superior to ours, or that third parties will not copy or
otherwise obtain or use our technologies without our authorization. We have
no patents or patent applications filed or pending.

     Other than federal, state and local environmental laws, our
manufacturing process is not subject to direct governmental regulation. Our
manufacturing process, which includes storage of hazardous materials, is
subject to a variety of federal, state and local environmental rules and
regulations. We make extensive use of engineering consultants to provide the
technical expertise to help ensure that our equipment is in compliance. Waste
water and ground water testing is conducted quarterly by an engineering
consultant, and the results are submitted directly to the appropriate
regulating agencies. We are permitted to dispose of our wastewater through
the Camden County Municipal Utilities Authority. We have a permit to use an
air scrubber system, which is tested periodically. We successfully completed
our compliance emission evaluation test in March 2000. We do not have a
pending notice of violations and are aware of no potential violations. We
train our employees in the proper handling of hazardous materials. There are
no buried storage tanks on our property. A Phase I environmental audit,
completed approximately two years ago, did not disclose any conditions
requiring remediation. Our environmental compliance costs are approximately
$300,000 per year.

Our research and development activities primarily have involved changes to
our manufacturing process and the introduction of equipment with newer
technology. Improvements to our manufacturing process are ongoing and related
costs are incorporated into our manufacturing expenses. Investigations into
use of purer raw material, alternative fuels and improved distribution
systems have been the emphasis of our research and development program.

     Our total work force consist of 24 employees; 3 administrative
(including 1 part time employee), 2 sales, and 19 shop personnel. The shop
currently is non-union.


ITEM 2.    DESCRIPTION OF PROPERTY

Facilities

     We own a manufacturing and office facility consisting of a one-story,
masonry and steel building containing approximately 15,760 square feet,
located at 385 Cooper Road, West Berlin, New Jersey, 08091. The building is
situated on a 3.686-acre site. It contains eight furnaces with attendant
pollution control systems, glass processing equipment, quality control
functions and administrative office space. We have received site plan
approval to construct four additional furnaces.  We believe the property is
in satisfactory condition and suitable for our purposes.

     The property is pledged as collateral against a note payable to a bank.



ITEM 3.  LEGAL PROCEEDINGS

     No material legal proceedings to which the Company or any of its
property is subject are pending, nor to the knowledge of the Company are any
such legal proceedings threatened.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted during the Fourth Quarter of the Fiscal Year covered
by this report, to a vote of security holders through solicitation of proxies
or otherwise.


<PAGE>
                                  PART II

ITEM 5.    MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


    The Registrant's Common Stock is quoted on the NASD-OTC Bulletin Board
under the symbol "DYSL". The Company's Common Stock has been traded publicly
since April 22, 1981. The "high" and "low" bid quotations for the Company's
Common Stock as reported by the OTC Bulletin Board for each quarterly period
for the fiscal years ended September 30, 2000 and September 30, 2001 were as
follows:

  Fiscal Quarter        High Bid Price        Low Bid Price
  --------------        --------------        -------------
       2000
       First              $0.625                $0.375
       Second              1.80                  1.40
       Third               1.40                  1.40
       Fourth              2.3125                1.0625

       2001
       First              $1.50                 $1.1875
       Second              1.50                  1.1875
       Third               1.40                  1.40
       Fourth              0.75                  0.55

     The above listed quotes reflect inter-dealer prices without retail
mark-up, mark-down, or commissions, and may not represent actual
transactions.

     As of September 30, 2001, there were 2,377,759 shares of common stock
outstanding held by approximately 350 holders of record of the Common Stock
of the Company (plus a small number of additional shareholders whose stock is
held in street name and who have declined disclosure of such information).

     The Company has paid no cash dividends since its inception. The Company
presently intends to retain any future earnings for use in its business and
does not presently intend to pay cash dividends in the foreseeable future.
Holders of the Common stock are entitled to share ratably in dividends when
and as declared by the Board of Directors out of funds legally available
therefor.

     The Company adopted a Stock Incentive Plan that provides for, among
others, incentives, granting to officers, directors, employees and
consultants options to purchase shares of our common stock up to a total of
1,350,000 shares. The 1,350,000 shares consist of three separate plan
approvals. The first plan was approved in February 1996 for 450,000 shares,
restated to reflect the stock splits of 1996. The second and third plans were
for 450,000 shares each and approved on January 1999 and January 2001. At
September 30, 2001, 590,023 shares of common stock were reserved for issuance
under the Plan. Options granted under the Plans are generally exercisable
over a five-year period. To date, options have been granted at exercise
prices ranging from $.56 to $4.25 per share. At September 30, 2001, 548,977
options were outstanding.

     The Company adopted an Employee Stock Purchase Plan that permits
substantially all employees to purchase common stock. Employees have an
opportunity to acquire common stock at a purchase price of 85% of the fair
market value of the shares. Under the plan, a total of 150,000 shares had
been reserved for issuance. Of these, 77,434 shares have been purchased by
the employees at purchase prices ranging from $.25 to $2.68 per share. During
any twelve-month period, employees are limited to a total of $5,000 of stock
purchases.

On September 19, 2000 the Company filed Form S-8 to register the shares
associated with the Stock Incentive Plans and the Employee Stock Purchase
Plan. Prior to that date the shares were restricted and subject to the
holding periods of Rule 144.

ITEM 6.    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 appearing
elsewhere in this Form 10-KSB



General Business Overview

     Fiscal year 2001 was a year in which the Company was able to make
strides in its goal to improve our financial position. Even though we
experienced a slowdown in the 4th quarter, overall the year was one of our
best. We were able to benefit from the demand of quick delivery at
competitive pricing, which is the norm, in the semi-conductor, optics and
laser industries. Sales for the fiscal year were $4,894,094, an increase of
$1,167,141 over the prior year. Demand slowed in the forth quarter fiscal
year 2001 and into the first quarter of fiscal year 2002, but we anticipate
this to improve with the recovery of the semi-conductor market and increased
demand from the safety detection equipment industry. We also plan to be more
active in our pursuit of international business through the use of
international sales representatives. The above sales generated income of
$219,347, an increase of $75,141 over the prior year.


Results of Operations

     Sales increased to $4,894,094 for fiscal year 2001 from $3,726,953 for
fiscal year 2000. The increase of $1,167,141 or 31.3% reflects the increased
demand for optical materials in the semiconductor, telecommunications, optics
and laser markets. This increase was especially evident in the first three
quarters of fiscal year 2001. Demand slowed in the last quarter fiscal year
2001 and continued into the first quarter fiscal year 2002. We anticipate
this to change beginning with the second quarter fiscal year 2002 with the
recovery of the semiconductor industry and growth in the safety detection
equipment market.

     International sales continue to play an important role in our results.
Sales from international shipments accounted for 13% of total sales. Even
though this is a 5% reduction from fiscal year 2000, we anticipate increases
in fiscal year 2002, as a result of our engagement of sales representatives,
covering England, France and Israel. During fiscal year 2002 we plan to
secure representation in the Asian market.

     Cost of sales, as a percentage of sales, continued to improve. Cost of
sales increased to $3,449,109 or 70.5% of sales for fiscal year 2001 from
$2,677,784 or 71.8% of sales for fiscal year 2000. The improvement in cost of
sales as a percentage of revenues from fiscal year 2000 to fiscal year 2001,
a decrease of 1.3%, was a direct result of our ongoing policy to improve
product flow and control manufacturing cost. A significant aspect of the
improvement was our ability to facilitate our work force with overtime, as
opposed to new hires, to handle the 31.3% increase in sales.

      Gross profit increased to $1,444,985 or 29.5% of sales, for fiscal year
2001 from $1,049,169 or 28.2% of sales for fiscal year 2000. The increase of
$395,816, or 37.7%, is a direct result of a combination of increased revenue
and decreased cost of sales, as a percentage of sales, as discussed above.

     Selling, general and administrative expenses as a percentage of sales,
continued to improve. Selling, general and administrative expenses increased
to $848,237 or 17.3% of sales, for fiscal year 2001 from $704,004 or 18.9% of
sales, for fiscal year 2000. The increase of $144,233 was related to
increased salaries connected to performance bonuses, increased travel
expenses, increased investor relations expenses and the implementation of a
cash fee for our Directors.

     Interest Expense-net, decreased to $144,490 or 2.9% of sales for fiscal
year 2001 from $189,890 or 5.1% of sales for fiscal year 2000. The decrease
of $45,400 was the result of debt decreasing overall by $233,000, replacing
existing 12% debt with 7.5% debt, and the positive effect of a greatly
improved cash position. We were able to earn interest of $19,500 in fiscal
year 2001 after earning nothing in fiscal year 2000.

     Other expenses increased to $232,911 for fiscal year 2001 from $11,069
for fiscal year 2000. The increase of $221,842 was directly related to a
$175,000 write down of recyclable inventory and a $57,911 loss on project
abandonment. These items are discussed in detail in our 10-QSB filing for the
quarter ended June 30, 2001.

     Net income increased to $219,347 or 4.5% of sales, for fiscal year 2001
from $144,206 or 3.9% of sales for fiscal year 2000. The improvement is a
swing of $75,141 from fiscal year 2000 to fiscal year 2001.

     The Company has no provisions for income taxes for either fiscal 2001 or
2000. As of September 30, 2001 we have approximately $585,000 of net
operating loss carryforwards to offset future taxable income for federal tax
purposes expiring in various years through 2019. In addition, the Company has
approximately $17,000 of net operating loss carryforwards to offset certain
future states' taxable income, expiring in various years through 2007.


Liquidity and Capital Resources

     Net cash provided by operating activities increased to $871,859 for
fiscal year 2001, from $329,506 for fiscal year 2000. The increase of
$542,353 was due primarily to the decrease in Accounts Receivable from fiscal
year 2000 to fiscal year 2001 of $139,458, the write off of the recyclable
inventory of $175,000 and the loss on project abandonment of $57,911.

     Cash flows used in investing activities increased to $313,048 for fiscal
year 2001, from $67,787 for fiscal year 2000. The increase of $245,261 was
related to increases in purchase of property, plant and equipment of 111,301
and an increase in restricted cash of $200,000.

     Cash flows used in financing activities increased to $335,121 for
fiscal year 2001, from $152,277 for fiscal year 2000. The increase of
$182,844 was a result of repayment of long- term debt of $555,364 being
offset by proceeds of $200,000 received from incurring new long-term debt.

     The Company believes that its current cash and cash equivalent
balances, and net cash generated by operations, will be sufficient to meet
its anticipated cash needs for working capital for at least the next 12
months. Any business expansion may require the Company to seek additional
debt or equity financing.


Forward-Looking Statements

     The statements contained in this Annual Report on Form 10-KSB which are
not historical facts, including, but not limited to, certain statements found
under the captions "Business," "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 Annual Report on Form 10-KSB, 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 7.  FINANCIAL STATEMENTS







                        INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Dynasil Corporation of America and Subsidiaries
Berlin, New Jersey

We have audited the accompanying consolidated balance sheets of DYNASIL
CORPORATION OF AMERICA AND SUBSIDIARIES as of September 30, 2001 and 2000,
and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of DYNASIL
CORPORATION OF AMERICA AND SUBSIDIARIES as of September 30, 2001 and 2000 and
the results of their operations and their cash flows for the years then ended
in conformity with accounting principles generally accepted in the United
States of America.


HAEFELE, FLANAGAN & CO, p.c.

Moorestown, New Jersey
November 2, 2001




                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2001 AND 2000

                                     ASSETS
<TABLE>
<S>                                                     <C>              <C>
                                                               2001            2000
                                                           ----------      ----------
Current assets
   Cash and cash equivalents                                $ 473,385      $  249,695
   Accounts receivable, net of allowance for doubtful
    accounts of $-0- and $6,000 for 2001 and 2000           469,030         608,488
   Inventories                                                768,707         909,223
   Prepaid expenses and other current assets                   26,577          32,596
                                                           ----------      ----------
        Total current assets                                1,737,699       1,800,002

Property, Plant and Equipment, net                          1,701,730       1,838,599

Other Assets
   Restricted cash     			                          200,000             0
   Other assets                     		               18,873          20,534
                                			           ----------      ----------
     Total other assets         		                    218,873          20,534
                                  			           ----------       ----------
        Total Assets                                       $3,658,302      $3,659,135
                                                           ==========      ==========
</TABLE>


                 LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<S>                                                    <C>               <C>
                                                               2001            2000
                                                           ----------      ----------
Current Liabilities
   Current portion of long-term debt                        $ 419,493      $  147,859
   Accounts payable                                           139,736         101,871
   Accrued expenses and other current liabilities             120,527         165,751

                                                           ----------      ----------


        Total current liabilities                             679,756         415,481

Long-term Debt, net                                         1,116,187       1,620,885

Stockholders' Equity
   Common Stock, $.0005 par value, 25,000,000 shares
    authorized, 3,018,383 and 2,997,292 shares issued,
    2,377,759 and 2,356,668 shares outstanding
    for 2001 and 2000, respectively                             1,509           1,499
   Additional paid in capital                               1,082,542       1,062,309
   Retained earnings                                        1,737,611       1,518,264
                                                           ----------      ----------
                                                            2,821,662       2,582,072

   Less 640,624 shares of treasury stock, at cost            (959,303)       (959,303)
                                                           ----------      ----------
        Total stockholders' equity                          1,862,359       1,622,769
                                                           ----------      ----------
        Total Liabilities and Stockholders' Equity         $3,658,302      $3,659,135
                                                           ==========      ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.




                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000


                                                    2001                2000
                                                 ----------          ----------

Net sales                                       $4,894,094          $3,726,953
Cost of sales                                    3,449,109           2,677,784
                                                 ----------          ----------
Gross profit                                     1,444,985           1,049,169
Selling, general and administrative                848,237             704,004
                                                 ----------          ----------
Income from operations                             596,748             345,165

Other income (expense)
     Interest expense, net                        (144,490)           (189,890)
     Other expense                                (232,911)            (11,069)
                                                 ----------          ----------
                                                  (377,401)           (200,959)
                                                 ----------          ----------
Income before income taxes                         219,347             144,206

Income taxes                                           0                   0
                                                 ----------          ----------
Net income                                        $ 219,347           $ 144,206
                                                 ==========          ==========



Basic net income per common share               $    0.09          $     0.06
                                                 ==========          ==========

Diluted net income per common share             $    0.09          $     0.06
                                                 ==========          ==========



The accompanying notes are an integral part of these consolidated financial
statements.



                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
<TABLE>
<S>                                          <C>           <C>        <C>               <C>

                                                                         Additional
                                                                           Paid-in        Retained
                                                Shares       Amount        Capital        Earnings
                                              ---------      ------      ----------      ----------

Balance, October 1, 1999                      2,985,566      $1,493      $1,058,525      $1,374,058

Issuance of shares of common stock under
 employee stock purchase plan                    11,726           6           3,784               0

Net Income                                            0           0               0         144,206
                                              ---------       -----         -------       ---------
Balance, September 30, 2000                   2,997,292      $1,499      $1,062,309      $1,518,264

Issuance of shares of common stock under
 employee stock purchase plan                     5,591           2           3,551               0

Issuance of shares of common stock under
 stock option plan                  	       15,500           8          16,682               0

Net Income                                            0           0               0         219,347
                                              ---------       -----       ---------       ---------
Balance, September 30, 2001                   3,018,383      $1,509      $1,082,542      $1,737,611

                                              =========      ======      ==========      ==========
</TABLE>

<TABLE>
<S>                                              <C>          <C>            <C>
                                                      Treasury Stock             Total
                                                  -----------------------     Stockholders'


                                                   Shares        Amount          Equity
                                                  -------      ----------     -------------

Balance, October 1, 1999                          640,624      ($959,303)       1,474,773

Issuance of shares of common stock under
 employee stock purchase plan                           0              0            3,790

Net Loss                                                0              0          144,206
                                                  -------      ----------     -------------
Balance, September 30, 2000                       640,624      ($959,303)      $1,622,769


Issuance of shares of common stock under
 employee stock purchase plan                           0              0            3,553

Issuance of shares of common stock under
 stock option plan                                     0              0           16,690

Net Income                                              0              0          219,347
                                                  -------      ----------     ------------
Balance, September 30, 2001                       640,624      $(959,303)      $1,862,359
                                                  =======      =========       ==========

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

<TABLE>
<S>                                                      <C>                 <C>
                                                                  2001              2000
                                                               ---------        -----------

Cash flows from operating activities:
    Net income                                                 $ 219,347       $    144,206
    Adjustments to reconcile net income to net
     cash provided by operating activities
       Depreciation and amortization                             315,967            337,522
       Recyclable inventory write-off  		                 175,000                0

     Loss on project abandonment                                  57,911                0
       (Increase) decrease in:
         Accounts receivable                                     139,458           (237,649)
         Inventories                                             (34,484)            48,800
         Prepaid expenses and other current assets                 6,019             14,003
       Increase (decrease) in:
         Accounts payable                                         37,865              9,407
         Accrued expenses and other current liabilities          (45,224)            13,217
                                                               ---------        -----------
Net cash provided by operating activities                        871,859            329,506
                                                               ---------        -----------

Cash flows from investing activities:
     Purchases of property, plant and equipment                 (111,301)           (66,384)
     Increase in restricted cash                                 200,000                  0
     Other assets                                                 (1,747)            (1,403)
                                                               ---------        -----------
Net cash used in investing activities                           (313,048)           (67,787)
                                                               ---------        -----------
Cash flows from financing activities:
     Repayment of long-term debt                                (555,364)          (156,067)
     Proceeds from long-term debt                   		     200,000       	    0
     Issuance of common stock                           		20,243              3,790
                                                               ---------        -----------
Net cash used in financing activities                           (335,121)          (152,277)
                                                               ---------        -----------
Net increase in cash and cash equivalents                        223,690            109,442
Cash and equivalents, beginning                                  249,695            140,253
                                                               ---------        -----------
Cash and equivalents, ending                                   $ 473,385        $   249,695
                                                               =========        ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


1 - Summary of Significant Accounting Policies

Nature of Operations

     The Company is primarily engaged in the manufacturing and marketing of
customized synthetic fused silica products.  The Company's products and
services are used in the optical lens and laser manufacturing industries, as
well as in the medical industry.  Other applications include usage in the
manufacturing of analytical instruments and semi-conductors.

     The Company's products and services are provided primarily in the
United States with some international activity.

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts
of Dynasil Corporation of America and its wholly-owned subsidiaries, Dynasil
International Incorporated and Hibshman Corporation. All significant
intercompany transactions have been eliminated.

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes.  Actual results could differ from those estimates.

Revenue Recognition

     The Company records sales upon shipment to customers with terms of FOB
shipping point. After shipment, the Company has no remaining obligations.
Returns of products shipped are and have historically not been material.

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.

Property, Plant and Equipment and Depreciation and Amortization

     Property, plant and equipment are recorded at cost.  Depreciation is
provided using the straight-line method for financial reporting purposes and
accelerated methods for income tax purposes over the estimated useful lives
of the respective assets.


<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000

Note 1 - Summary of Significant Accounting Policies

Property, Plant and Equipment and Depreciation and Amortization

  The estimated useful lives of assets for financial reporting purposes are
as follows:  building and improvements, 10 to 25 years; machinery and
equipment, 5 to 10 years; office furniture and fixtures, 5 to 7 years;
transportation equipment 5 years. Maintenance and repairs are charged to
expense as incurred; major renewals and betterments are capitalized. When
items of property, plant and equipment are sold or retired, the related costs
and accumulated depreciation are removed from the accounts and any gain or
loss is included in income.

Other Assets

     Other assets include deferred financing costs which are amortized using
the straight-line method over 7 years.  Amortization expense for the years
ended September 30, 2001 and 2000 was $3,408 and $3,408.  Accumulated
amortization as of September 30, 2001 and 2000 was $10,792 and $7,384.

Advertising

     The Company expenses all advertising as incurred.  Advertising expense
for the years ended September 30, 2001 and 2000 was $10,973 and $11,195.

Income Taxes

     Dynasil Corporation of America and its wholly-owned subsidiaries file a
consolidated federal income tax return.

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under the liability method prescribed by SFAS No. 109, a deferred tax asset
or liability is determined based on the differences between the financial
statement and tax basis of assets and liabilities as measured by the enacted
tax rates which will be in effect when these differences reverse.  Tax
credits are recorded as a reduction in income taxes.  Valuation allowances
are provided if, it is more likely than not, that some or all of the deferred
tax assets will not be realized.


<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000

 Note 1 - Summary of Significant Accounting Policies (continued)

 Net Income Per Share

     Basic net income per share is computed using the weighted average
number of common shares outstanding.  The dilutive effect of potential common
shares outstanding are included in diluted net income per share.  The
computations of basic and diluted net income per share are as follows:


                                	     2001           2000

     Net Income       	      	     $219,347       $144,206
                        	           ========       ========

     Basic weighted average shares      2,368,579      2,352,704
     Effect of dilutive securities:
       Common stock options                    0              0
                    	                ---------      ---------
                         	          2,368,579      2,352,704
                              	    =========      =========
     Net income per share
       Basic                          $ 0.09         $ 0.06
       Diluted                        $ 0.09         $ 0.06

  Diluted net income per share excludes the impact of common stock options of
548,977 and 126,977 for 2001 and 2000, respectively, and common stock
warrants of 6,450 and 26,450 for 2001 and 2000, since the exercise prices
were greater than the average market price of the common shares and
therefore, would have resulted in an antidilutive effect.

Long-Lived Assets

The Company's policy is to record long-lived assets at cost amortizing these
costs over the expected useful lives of the related assets.  Measurement of
an impairment loss for long-lived assets and certain identifiable intangibles
to be disposed of are to be reported generally at the lower of the carrying
cost amount or fair value less cost to sell. Under the provisions of this
statement, the Company has evaluated its long-lived assets for financial
impairment, and will continue to evaluate them as events or changes in
circumstances indicate that the carrying amount of such assets may not be
fully recoverable.

The Company evaluates the recoverability of long-lived assets not held for
sale by measuring the carrying amount of the assets against the estimated
undiscounted future cash flows associated with them.  At the time such
evaluations indicate that the future undiscounted cash flows of certain long-
lived assets are not sufficient to recover the carrying value of such assets,
the assets are adjusted to their fair values.  Based on these evaluations,
there were no adjustments to the carrying value of long-lived assets during
the years ended September 30, 2001 and 2000.


Stock Based Compensation

     The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock Based Compensation."  The Company applies APB Opinion
No. 25, "Accounting for Stock Issued to Employees" to account for its stock
options using the intrinsic value method.  Under APB No. 25, compensation
cost for stock options, if any, is measured as the excess of the quoted
market price of the Company's stock at the date of grant over the cost to
acquire the stock.  Accordingly, no compensation cost has been recognized in
the financial statements for stock options issued to employees since the
options were granted at the quoted market price 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.  SFAS No. 123 further requires
companies using the intrinsic value method to make certain proforma
disclosures using the fair value method.  Additional disclosures are included
in Note 9.




<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000

Note 1 - Summary of Significant Accounting Policies (continued)


 Fair Value

     The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, accounts payable, and debt.  The carrying
amounts of cash and cash equivalents, accounts receivable, and accounts
payable approximate fair value due to the short maturity of these
instruments.  Based on borrowing rates currently available to the Company for
loans with similar terms and maturities, the Company's debt approximates its
fair value.

Concentrations of Credit Risk

     Financial instruments which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and cash equivalents
and accounts receivable.  The Companies maintain cash and cash equivalents at
various financial institutions in Pennsylvania. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation up to $100,000.  At
September 30, 2000, the Companies' uninsured bank balances totaled $558,129. The
Company has not experienced any significant losses on its cash and cash
equivalents.  The Company performs ongoing credit evaluations of it customers
and generally requires no collateral from its customers.  The Company
maintains allowances for potential credit losses and has not experienced any
significant losses related to the collection of its accounts receivable.  As
of September 30, 2001 and 2000, approximately $34,902 and $79,011 or 7% and
13% of the Company's accounts receivable are due from foreign sales.

New Accounting Pronouncements

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements."  SAB No. 101 provides guidance on the recognition, presentation
and disclosure of revenue in financial statements.  The Company's
implementation of SAB 101 in the fourth quarter of fiscal year 2001 had no
impact on its financial position, results of operations or cash flows for the
year ended September 30, 2001.

Effective July 1, 2000, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 44, "Accounting for Certain Transactions
involving Stock Compensation".  Previously, the Company's non-employee board
of directors were not considered employees for purposes of applying the
provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees".
FASB Interpretation No. 44 provides an exception   requiring   the
application   of   APB   25   to   stock compensation granted to non-employee
directors for services provided in their capacity as a director. The
interpretation requires that stock options granted to non-employee directors,
if previously accounted for as grants to awarded to non-employees, be
accounted for under APB 25 and should be recorded as a cumulative effect of a
change in accounting principle and included in the current year's statement
of operations.  The application of this interpretation did not have a
material impact on the Company's financial statements.

     Also in 2000, the Financial Accounting Standards Board's Emerging
Issues Task Force issued EITF No. 00-10, "Accounting for Shipping and
Handling Fees and Costs", which addresses the income statement classification
of shipping and handling costs billed to customers.  The Company's
implementation of EITF 00-10 in the fourth quarter of fiscal year 2001 had no
impact on its financial position, results of operations or cash flows for the
year ended September 30, 2001.

Statement of Cash Flows

     For purposes of the statement of cash flows, the Company generally
considers all highly liquid investments with maturities of three months or
less to be cash equivalents.

Reclassifications

     Certain items in the 2000 consolidated financial statements have been
reclassed to conform with the 2001 consolidated financial statement
presentation.



<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


Note 2 - Restricted Cash

     Restricted cash consists of certificates of deposit pledged as
collateral for the $172,222 note payable to the bank (See Note 6).


Note 3 - Inventories

     Inventories at September 30, 2001 and 2000 consisted of the following:

                                2001            2000
          Raw Materials       $379,899       $555,133
          Work-in-Process      224,739        215,556
          Finished Goods       164,069        138,534
                              --------       ---------
                              $768,707       $909,223
                              =========      =========

In June 2001 management prepared an evaluation of the feasibility of
continuing to pursue the market for recycled synthetic fused silica.  This
market encompassed the use of "drop-offs", converted to another form by
melting or crushing, for various applications.  The lack of a strong demand
in this market led management to abandon this segment.  This decision
resulted in management writing down the carrying value of inventory
identified for this market.  The result was a $175,000 charge to income and
is included in other expense. (See Note 7)

Note 4 - Property, Plant and Equipment

     Property, plant and equipment at September 30, 2001 and 2000 consist of
the following:

                                            2001           2000


          Land                          $      261          $      261
          Building and improvements      2,536,071           2,479,576
          Construction in progress               0                   0
          Machinery and equipment        3,012,006           2,834,900
          Office furniture and fixtures    225,535             225,535
          Transportation equipment          53,419              53,419
                                        ----------          ----------
                                         5,827,292           5,651,602
          Less accumulated depreciation  4,125,562           3,813,003
                                        ----------          ----------
                                        $1,701,730          $1,838,599
                                        ==========          ==========

Included in the cost of machinery and equipment at September 30, 2001 and
2000 is $165,831 and $233,275 representing the cost of assets under
capitalized lease obligations.  Accumulated depreciation at September 30,
2001 and 2000 for the capitalized leases was $20,661 and $57,672.

Depreciation expense for the years ended September 30, 2001 and 2000 was
$312,559 and $334,114, of which $15,669 and $24,037 represents depreciation
of assets under capitalized lease obligations.

Note 5 - Line of Credit

     The Company has a $150,000 line of credit agreement with a bank.
Advances under the line are due on demand with interest at the Bank's prime
rate plus 1% (7.0% and 10.5% at September 30, 2001 and 2000).  The note is
secured by a mortgage on the Berlin, New Jersey property, accounts
receivable, inventories, machinery and equipment and leasehold improvements.
At September 30, 2001 and 2000, the entire amount was available.




<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


  Note 6 - Long-Term Debt

 Long-term debt at September 30, 2001 and 2000 consisted of the following:
<TABLE>
<S>                                                    <C>                 <C>

			                                             2001          2000

     Subordinated debentures bearing interest at
     12% per annum payable semiannually, due
     December 1, 2001, unsecured, repaid June 2001        $       0       $  350,350

     Subordinated debentures bearing interest at
     10% per annum payable semiannually, due
     June 1, 2002, unsecured                      		   212,100       216,600

     Note payable to bank in monthly installments of
     $7,222 plus interest at the Bank's prime rate plus
     0.5%(6.5% and 10.5% at September 30, 2001 and
     2000), final payment of $700,556 due August 1,
     2005, secured by first Mortgage on Berlin, New
     Jersey property and all accounts receivable,
     Inventory, equipment and general intangibles
     Of the Company                             		 1,032,778     1,119,445

     Note payable to bank in monthly installments of
     $5,556 plus interest at 7.25%, due April 2004,
     Secured by certificate of deposits, first mortgage
     On Berlin, New Jersey property, and all accounts
     Receivable, inventory, equipment and general
     Intangibles of the Company (See Note 2)    	         172,222            0

     Capital lease obligations payable in total monthly
     Installments of $5,328 in 2001 and $5,415 in
     2000, including interest rates ranging from 10.2%
     to 11.2% due March 2003 and March 2004,
     secured by equipment                     		         118,580        82,349
                                      		           -----------    -----------
                                          		      $1,535,680    $1,768,744
     Less current portion                      		        (419,493)    (147,859)
                                       		           -----------   ------------
                                     		            $1,116,187    $1,620,885
                                          		     ===========   ============
</TABLE>


 The current portion includes $54,062 and $61,191 payable under capital lease
obligations at September 30, 2001 and 2000.  The aggregate maturities of
long-term debt, including capital lease obligations as of September 30, 2001
are as follows:

                                        Capital Lease    Total Long-
                         Notes Payable  Obligations      Term Debt
                         -------------- -------------    -----------
     September 30, 2003  $  153,339          $  48,511    $ 201,850
     September 30, 2004     125,550             16,007      141,557
     September 30, 2005     772,780                  0      772,780
                         ----------          ----------  -----------
                         $1,051,669          $  64,518   $1,116,187
                         ==========          =========== ===========


<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


Note 7 - Other Expense

      The Company's other expense for the years ended September 30, 2001 and
2000 consists of the following:

                                              2001                   2000
     Recyclable inventory write-off       $  175,000               $     0
     Loss on project abandonment              57,911                     0
     Other                                         0                 11,069
                                          ----------               --------
                                          $  232,911               $ 11,069
                                          ==========               ========

  Note 8 - Income Taxes

     The Company's income tax expense (benefit) for the years ended
September 30, 2001 and 2000 are as follows:

                                 2001               2000

     Current
          Federal             $51,300             $43,700
          State                 7,300              15,300
                              --------            --------
                               68,600              59,000
     Deferred
          Federal             (51,300)            (43,700)
          State               (17,300)            (15,300)
                              --------            --------
                              $     0             $     0
                              ========            ========

The reasons for the difference between total tax expense and the amount
computed by applying the statutory federal income tax rates to income before
income taxes at September 30, 2001 and 2000 are as follows:

                              		     2001                2000
Taxes at statutory rates applied to
 income before income taxes                $  64,500           $  40,700
Increase (reduction) in tax resulting
 from:
  Depreciation                                 4,700               9,300
  Inventories                               ( 12,150)              2,050
  Accounts receivable                       (  1,760)            ( 1,380)
  Vacation pay                                 1,140             ( 2,660)
  State income taxes                          12,200              11,000
  Net operating loss carryforwards          ( 68,630)            (59,010)
                                          ----------            ----------
                                           $       0           $       0
                                          ==========            ==========




<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


 Note 8 - Income Taxes (continued)


Deferred income taxes (benefit) reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes,
and the tax effects of net operating losses that are available to offset
future taxable income.  Significant components of the Company's deferred tax
assets (liabilities) at September 30, 2001 and 2000 are as follows:


                                       2000                2001
Inventories                        $  32,000           $  48,500
Vacation pay                           8,000               6,500
Accounts receivable                       0                2,400
Depreciation                        (134,200)           (164,300)
Net operating loss carryforwards     200,500             288,600
Less valuation allowance            (106,300)           (181,700)
                                   ---------           ----------
                                   $       0           $       0
                                   =========           ==========

Based on the company's history of significant fluctuations in net earnings
there is uncertainty as to the realization of certain net operating loss
carryforwards. Accordingly, a valuation allowance has been provided for those
deferred tax assets which management believes it is more likely than not that
the tax benefit will not be realized.  At September 30, 2001, the Company has
approximately $585,000 of net operating loss carryforwards to offset future
taxable income for federal tax purposes expiring in various years through
2019.  In addition, the main operating Company has approximately $17,000 of
net operating loss carryforwards to offset certain future state taxable
income, expiring in various years through 2007.


Note 9 - Stockholders' Equity


 Stock Based Compensation

     The Company adopted Stock Incentive Plans in 1996 and 1999 which
provide for, among other incentives, the granting to officers, directors,
employees and consultants options to purchase shares of the Company's common
stock.  The Company's 1999 Stock Incentive Plan was amended on July 25, 2000,
with an effective date of January 1, 1999.  Options are generally exercisable
at the fair market value on the date of grant over a five year period
expiring through 2004.  The Plans also allow eligible persons to be issued
shares of the Company's common stock either through the purchase of such
shares or as a bonus for services rendered to the Company.  Shares are
generally issued at the fair market value on the date of issuance. The
maximum shares of common stock which may be issued under the plans are
1,350,000 shares, of which 590,023 shares of common stock are available for
future purchases under the plan at September 30, 2001.

During the years ended September 30, 2001 and 2000, 480,000 and 21,000 stock
options were granted annually with exercise prices of $1.50 per share in 2001
and $.56 per share in 2000, representing the fair market values on the date
of grant.  During the years ended September 30, 2001 15,500 options were
exercised.  No options were exercised in 2000.  The Company cancelled 42,500
and 7,300 options during the years ended September 30, 2001 and 2000,
respectively.  Compensation expense relating to non-employee stock options
granted during the years ended September 30, 2001 and 2000 was $-0-.



<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000

Note 9 - Stockholders' Equity (continued)

 Stock Based Compensation (continued)

A summary of stock option activity for the years ended September 30, 2001 and
2000 is presented below:

                                     	        Exercise Price
                            	                Shares      Per Share
                                 	       ---------  --------------
Options outstanding at October 31, 1999       113,277   $1.17 - $4.25

Granted in 2000                                21,000       $ .56
Cancelled in 2000                            (  7,300)      $2.65
                                  	         ---------
Options outstanding at September 30, 2000     126,977   $ .56 - $4.25

Granted in 2001                               480,000       $1.50
Exercised in 2001                            ( 15,500)  $ .56 - $2.00
Cancelled in 2001                            ( 42,500)  $ .56 - $2.00
                                             ---------
Options outstanding at September 30, 2001     548,977   $ .56 - $4.25
                                             =========

Options exercisable at September 30, 2001     548,977   $ .56 - -$4.25
                                             =========

At September 30, 2001 and 2000, the Company had warrants outstanding to
purchase 6,450 and 26,450 shares of the Company's common stock at exercise
prices of $3.00 per share, exercisable through June 1, 2002.  No warrants
were exercised during the years ended September 30, 2001 and 2000.


Pro Forma Fair Value Disclosures

     The Company accounts for all plans under APB Opinion No. 25, under
which no compensation cost has been recognized since all options granted
during 2001 and 2000 have been granted at the fair market value of the
Company's common stock.  Had compensation cost for these plans been
determined in accordance with SFAS No. 123, the Company's net income and net
income per common share would have been as follows:

                                          2001           2000

     Net income                          $94,115        $119,216
                                        ========        ========
     Basic net income per common share:  $  0.04        $   0.05
                                        ========        ========

Under SFAS No. 123, the fair value of each option was estimated on the date
of grant using the Black Scholes option-pricing model.  Based on the
assumptions presented below, the weighted average fair value of options
granted was $1.19 and $.36 per option in 2001 and 2000.

                                        2001           2000

     Expected life of option in years    5.0            5.0
     Risk-free interest rate             5.5%           6.1%
     Expected volatility                61.0%          48.8%
     Dividend yield                      0.0%           0.0%

 The effects of applying SFAS No. 123 for the purpose of providing pro forma
disclosures may not be indicative of the effects on reported net income and
net income per share for future years, as the pro forma disclosures include
the effects of only those awards granted after October 1, 1996.


<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000


Note 9 - Stockholders' Equity (continued)

 Employee Stock Purchase Plan

     On July 25, 2000, the Company's Employee Stock Purchase Plan was
amended with an effective date of January 1, 1999. The Plan  permits
substantially all employees to purchase common stock at a purchase price of
85% of the fair market value of the shares (amended from 65% in 1999).  Under
the plan, a total of 150,000 shares have been reserved for issuance.

 During any twelve month period, employees may not purchase more than the
number of shares for which the total purchase price exceeds $5,000.  During
the years ended September 30, 2001 and 2000, 5,591, and 11,726 shares of
common stock were issued under the plan for aggregate purchase prices of
$3,553, and $3,790, respectively.

Note 10 - Profit Sharing Plan

     The Company has 401k Plan for the benefit of its employees.  The
Company did not make a contribution to the plan during the years ended
September 30, 2001 and 2000.

Note 11 - Related Party Transactions

     The Company paid consulting fees to other stockholders/directors
totaling $-0- and $1,529 during the years ended September 30, 2001 and 2000.

Note 12 - Supplemental Disclosure of Cash Flow Information

                                        	  	   2001           2000
Cash paid during the year for:
  Interest                                	$ 178,191      $ 192,512
                                   		       =========      =========
Noncash investing and financing activities:

  Acquisition of property, plant and equipment  $ 233,601      $ 108,684
  Debt incurred                                 ( 122,300)      ( 42,300)
                                  		      ---------      ----------
  Cash paid for property and equipment   		$ 111,301      $  66,384
                                     	      =========      ==========
Note 13 - Subsequent Event

      In October 2001, the Company initiated a modest share buy-back
program, whereby the Company may repurchase its own stock on a periodic
basis.  There have been no purchases as of the date of this report.








ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
     FINANCIAL DISCLOSURE

There were no disputes or disagreements of any nature between the Company or
its management and its public auditors with respect to any aspect of
accounting or financial disclosure.


                                PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Six of our directors were elected to serve for one year at our Annual
meeting of the shareholders held on January 30, 2001. John Kane was appointed
to the board in conjunction with his appointment as CEO on August 1, 2001, at
our quarterly board of directors meeting. All directors will hold office
until their successors are elected at the next annual meeting of the
shareholders.

     Our executive officers and directors, and their ages at December 18,
2001, are as follows:

Name                               Age       Position
----                               ---       --------
James Saltzman                     57        Chairman of the Board
John Kane                          50        President and CEO, Director,
                                              Treasurer
Gen. Charles J. Searock, Jr.
  (USAF Ret)                  	65        Director, Secretary
Jan Melles                          61        Director
Nathan Schwartz                     41        Director
Dr. Peter P. Bihuniak               52        Director
Robert Lear                         56        Director
Bruce Leonetti                      47        Vice President

     None of the above persons is related to any other of the above-named
persons  by blood or marriage.

     Based upon a review of filings with the Securities and Exchange
Commission and written representations that no other reports were required,
the Company believes that all of the Company's directors and executive
officers complied during fiscal 2001 with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934.

     James Saltzman, Chairman, 56, has been a member of the Board since
February 1998.  From January 1997 to June 2000, Mr. Saltzman served as Vice
Chairman of the Board and a director of Madison Monroe, Inc., a private
company engaged in investments. He served as a director of Xyvision, Inc., a
publicly held company that develops, markets, integrates and supports content
management and publishing software, since 1992, and was Chairman of the Board
of such company from February 1994 to February 1995.  On September 19, 2001,
in the matter of Securities and Exchange Commission v. James S. Saltzman,
Civil Action No. 00-CV-2468 in the United States District Court for the
Eastern District of Pennsylvania, Saltzman consented, without admitting or
denying the allegations of the Commission's Complaint, to the entry of a
Final Judgment and Order in the case, to an order permanently enjoining him
from violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933
and Section 206(2) of the Investment Advisers Act of 1940, and requiring him
to pay disgorgement plus prejudgment interest in the amount of $1,920,340,
and a civil penalty in the amount of $50,000. The Order was entered on
September 19, 2001, by the Honorable Anita B. Brody.

     Also on January 31, 2001, the Commission instituted and simultaneously
settled an Administrative Proceeding against Saltzman pursuant to Section
203(f) of the Advisers Act. Without admitting or denying the Commission's
findings, Saltzman consented to the entry of an Order suspending him from
association with any investment adviser for a period of twelve months. The
basis for the Administrative Proceeding against Saltzman and the Commission's
findings was the entry of the Final Judgment and Order in the District Court
action.

     The Commission's Complaint in the District Court action alleged that
from at least 1994 through February 4, 2000, Saltzman, as investment adviser
to Saltzman Partners, violated the securities laws at issue by failing to
disclose material information relating to loans to him by Saltzman Partners
in annual financial statements of Saltzman Partners that were sent to the
limited partners, namely, that he had taken out approximately $1.78 million
in loans from Saltzman Partners, that by 1999 the loans amounted to
approximately 20% of Saltzman Partners' assets, and that the loans violated
specific terms of the loan provisions in the governing Partnership Agreement
and Private Placement Memorandum. Prior to the entry of the Final Judgment
and Order, Saltzman fully repaid with interest the loans he had taken from
Saltzman Partners, thus satisfying the Order of disgorgement by the District
Court.

     John Kane, 50, President and CEO, Treasurer, has been with Dynasil
Corporation since January 1997. On December 1, 2000 he was appointed
President of the Company and assumed primary responsibility for the day-to-
day operations. He took on the additional position of CEO on August 1, 2001.
Prior to his appointment as President Mr. Kane served as the Chief Financial
Officer of the Company. Preceding joining the Company he spent three years as
an independent financial consultant, primarily engaged in the design and
implementation of accounting systems. He was the Chief Financial Officer of
Delaware River Stevedores, Inc. from 1985 to 1993. Mr. Kane earned a B.B.A in
accounting from Temple University in 1975, and is a certified public
accountant.

     Lt. General Charles J. Searock, Jr. (USAF Ret), 65, Secretary of the
Corporation, has been a director of the Corporation since February 1996, was
President and CEO of the Corporation from 1996 to December 1, 2000, and
currently serves as Secretary.  General Searock retired from the United
States Air Force in 1993 after 37 years of active duty, having received
numerous military decorations. Prior to joining Dynasil, he was executive
Vice President of Aero Development Corporation from 1993 to 1996. General
Searock earned a BA in General Education from the University of Nebraska in
1962, and a Masters degree in Management from Central Michigan University in
1975.

     Jan Melles, 61, has been a member of the Board of Directors of the
Company since February 1996. Since 1991, Mr. Melles has been President and
sole shareholder of Photonics Investments, bv, which is engaged in
investments in, and mergers and acquisitions of, photonics companies. From
1988 to 1992, he served as Chief Executive Officer of Melles Griot, Inc., a
division of J. Bibby & Sons, PLC. Mr. Melles co-founded Melles Griot, Inc. in
1969 and sold it to J. Bibby & Sons, PLC in 1988. Mr. Melles also serves as a
director of Gooch and Housego, PLC, a publicly held company.  Mr. Melles
received a B.S. in electrical engineering from the Higher Maritime College in
Amsterdam, The Netherlands, in 1961.

     Nathan Schwartz, 41, has been a member of the Board since February 1996.
He is an attorney and financial advisor, providing legal and financial advice
to numerous financial service clients since 1992. Mr. Schwartz earned a B.A.
in History from Kenyon College in 1982, an Masters in Public/Private
Management from Columbia University in 1986, and a J.D. from the University
of Pittsburgh in 1989.

    Dr. Peter P. Bihuniak, 52, has been a member of the Board since February
1997. He has held his current position of Vice President of Technology for
BPSolar since 1998. From 1995 to 1997, he served as Director of Research and
Development of Pilkington, Libbey-Owens-Ford in Toledo, Ohio, directing
invention and development efforts for high performance flat glass. From 1988
to 1995, Dr. Bihuniak served in various positions with PPG Industries, Inc.,
one of the major producers of flat and fabricated flat glass products,
serving most recently as General Manager, Flat Glass Specialty Products
Division. Prior to that, he was with General Electric, Lighting Products
where he was responsible for Materials Technology.  He began his career with
Corning where he held a number of technical and technology management
positions in various specialty materials, including synthetic silicas and
optical wave-guides.  He received his B.S, Summa cum Laude from Rutgers
University, his M.S. from the University of California at Berkeley and his
PhD from Alfred University.

     Robert Lear, 56, has been a member of the Board since February 1998. He
is President and CEO of Penn Independent Corporation, an Insurance Holding
Company. He has held that position since September 1996 and previously served
as Executive Vice President-Finance and Chief Financial Officer of that
company for more than seven years. He was Vice President-Finance and Chief
Financial Officer of Penn-America Group, Inc. from its formation in July 1993
until March 1995, and still serves Penn-America Group, Inc. as a director.
Prior to joining Penn Independent, Mr. Lear had over 15 years of public
accounting experience, specializing in the insurance industry. Mr. Lear is a
certified public accountant.

     Bruce Leonetti, 47, Vice President - Sales and Marketing has been with
Dynasil Corporation since January 1999. He previously served in the same
position with the Company for 14 years prior to 1993 when he left for a
position as a development officer for the Engineering School at the
University of Pennsylvania. Mr. Leonetti earned a B.A. in Political Science
from the University of Pennsylvania in 1976.



 ITEM 10. EXECUTIVE COMPENSATION

                           Summary Compensation Table

<TABLE>
<CAPTION>

                                                                      Long Term Compensation
                                                                      ----------------------
                                  Annual Compensation                          Awards             Payouts
                                  -------------------                          ------             -------
                                                       Other                         Securities    Long-
Name and                                               Annual       Restricted       Underlying    Term      All other
Principle                                              Compen-        Stock            Options    Incentive   compen-
Position       Year     Salary ($)     Bonus ($)      sation ($)     Awards ($)          ($)      Plans ($)  sation ($)
---------      ----     ----------     ---------      ----------    -----------       ---------   ---------  ----------
<S>            <C>       <C>           <C>            <C>           <C>               <C>         <C>        <C>
Charles J.     2001    118,938
Searock,       2000    147,116
CEO  *         1999    122,703
Secretary


John           2001     114,122    18,565
Kane,   *      2000     100,327
President      1999      83,339                             2,625
Treasurer,



Bruce          2001      89,000     4,187
Leonetti,      2000      90,712
VP             1999      65,042

</TABLE>

* Effective July 31, 2001, Charles J. Searock relinquished the position of
CEO, and on August 1, 2001 John Kane assumed such position.

Employment Agreements

     The three-year employment agreement with Gen. Charles J. Searock, Jr.
(Ret.), Chief Executive Officer and Secretary, which commenced on December 1,
1996 was renewed for an additional one-year term on December 1, 1999, and
extended until July 31, 2001. Under the employment agreement, as amended
pursuant to the extension, Gen. Searock agreed to work for us full time as
CEO, and received an annual base salary of $125,000. Gen. Searock's agreement
also provided for an annual bonus at the discretion of our Board of
Directors. The agreement also provided for a 401(k) pension plan, health
insurance benefits and contains three-year non-competition provisions that
prohibit him from competing with us.  Gen. Searock retired on July 31, 2001,
and the agreement terminated according to its terms.  Gen. Searock is
currently the acting Secretary of the Corporation.

The current employment agreement with John Kane, President, Chief Financial
Officer and Treasurer, commenced on December 1, 2000 and will continue for a
three-year period, after which the agreement will automatically renew for
one-year terms, unless terminated by either party upon ninety days written
notice prior to the end of any term, or for cause. Under the employment
agreement, Mr. Kane has agreed to work for us full time, and receives an
annual base salary of $110,000. Mr. Kane's agreement also provides for
performance bonuses, and an additional annual bonus at the discretion of our
Board of Directors. The agreement also provides for a 401(k) pension plan,
health insurance benefits and contains eighteen-month non-competition
provisions that prohibit him from competing with us.  Mr. Kane assumed the
position of CEO on August 1, 2001, at no additional consideration.

We have also entered into an employment agreement with Bruce Leonetti, Vice
President of Marketing and Sales, which commenced on January 1, 1999 and will
continue for a three-year period, unless terminated for cause. Under the
employment agreement, Mr. Leonetti has agreed to work for us full time, and
receives an annual base salary of $89,000, with commissions based on the
gross dollar amount of product shipped. Mr. Leonetti's agreement also
provides for an annual bonus at the discretion of our Board of Directors. The
agreement also provides for a 401(k) pension plan, health insurance benefits
and contains twenty-four month non-competition provisions that prohibit him
from competing with us. In addition, the agreement provides that if Mr.
Leonetti is terminated without cause, he will receive a severance
consideration of three months' salary.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth the beneficial ownership of the Common
Stock of the Company as of September 30, 2001 by each person who was known by
the Company to beneficially own more than 5% of the common stock, by each
director and executive officer who owns shares of common stock and by all
directors and executive officers as a group:

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

Title      Name and Address             No. of Shares and nature of   Percent of
of Class   of Beneficial Owner          Beneficial Ownership(1)       Class
--------   -------------------          ---------------------------   ----------

Common     Saltzman Partners (2)             587,615                       24.57%
           621 East Germantown Pike
           Suite 105
           Plymouth Valley PA  19401

Common     James Saltzman(3)                 127,370                        5.13%
           621 East Germantown Pike
           Suite 105
           Plymouth Valley PA  19401

Common     Gen. Charles J. Searock,          146,430                        5.96%
           Jr. (USAF Ret) (4)
           39 Tee Pee Court
           Medford, NJ   08055

Common     Jan Melles(5)                     119,500                        4.86%
           9 Riverside Road
           Laguna Niguel, CA   92677

Common     Nathan Schwartz(6)                 86,394                        3.51%
           621 East Germantown Pike
           Suite 105
           Plymouth Valley, PA 19401

Common     Dr. Peter P. Bihuniak(7)           79,000                        3.20%
           631 Scenic Circle
           Holland, OH   43528

Common     Robert Lear(8)                    236,236                        9.60%
           420 South York Road
           Hatboro, PA   19040

Common     John Kane(9)                      60,425                         2.47%
           149 Plowshare Road
           Norristown, PA  19403

Common     Bruce Leonetti (10)               55,300                        2.27%
           200 Birdwood Avenue
           Haddonfield, NJ   08033

All Officers and Directors
as a Group                                  910,655                       31.03%

</TABLE>
------------

(1)    The numbers and percentages shown include shares of common stock
issuable to the identified person pursuant to stock options that may be
exercised within 60 days.  In calculating the percentage of ownership, such
shares are deemed to be outstanding for the purpose of computing the
percentage of shares of common stock owned by such person, but are not deemed
to be outstanding for the purpose of computing the percentage of share of
common stock owned by any other stockholders.  The number of shares
outstanding on November 30, 2001 was 2,391,603.


(2) James Saltzman disclaims beneficial ownership of the 587,615 shares owned
by Saltzman Partners.

(3)  Includes options to purchase 3,000 shares of the Company's common stock
at $3.52 per share and options to purchase 90,000 shares of the Company's
common stock at $1.50 per share.

(4) Includes options to purchase 3,000 shares of the Company's common stock
at $1.17 per share and options to purchase 3,000 shares of the Company's
common stock at $.56 per share and options to purchase 60,000 shares of the
Company's common stock at $1.50 per share.

(5)  Includes options to purchase 3,000 shares of the Company's common stock
at $3.52 per share, options to purchase 3,000 shares of the Company's common
stock at $1.17 per share, options to purchase 3,000 shares of the Company's
common stock at $.56 per share and options to purchase 60,000 shares of the
Company's common stock at $1.50 per share.

(6)  Includes options to purchase 3,000 shares of the Company's common stock
at $4.25 per share, options to purchase 3,000 shares of the Company's common
stock at $3.52 per share, options to purchase 3,000 shares of the Company's
common stock at $1.17 per share, options to purchase 3,000 shares of the
Company's common stock at $.56 per share and options to purchase 60,000
shares of the Company's common stock at $1.50 per share.

(7)  Includes options to purchase 10,000 shares of the Company's common stock
at $3.00 per share,  options to purchase 3,000 shares of the Company's common
stock at $3.52 per share, options to purchase 3,000 shares of the Company's
common stock at $1.17 per share, options to purchase 3,000 shares of the
Company's common stock at $.56 per share and options to purchase 60,000
shares of the Company's common stock at $1.50 per share.

(8) Includes options to purchase 3,000 shares of the Company's common stock
at $3.52 per share, options to purchase 3,000 shares of the Company's common
stock at $1.17 per share,  options to purchase 3,000 shares of the Company's
common stock at $.56 per share and options to purchase 60,000 shares of the
Company's common stock at $1.50 per share ; also includes 167,236 shares
owned by Penn Independent Corporation, for which Mr. Lear disclaims
beneficial ownership.

(9) Includes options to purchase 5,500 shares of the Company's common stock
at $2.65 per share and options to purchase 45,000 shares of the Company's
stock at $1.50 per share.

(10) Includes options to purchase 45,000 shares of the Company's stock at
$1.50 per share.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


  NONE.

 
<PAGE>
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are filed pursuant to Item 601 of Regulation S-B:

Exhibit No.  Description of Document

3.01*        Restated Certificate of Incorporation of Registrant filed
             April 1, 1969, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

3.02*        Certificate of Amendment to the Certificate of Incorporation of
             Registrant filed March 18, 1988, filed as an exhibit to
             Registrant's Registration Statement on Form 10-SB, filed October
             1, 1999

3.03*        Certificate of Amendment to the Certificate of Incorporation of
             Registrant filed April 7, 1989, filed as an exhibit to
             Registrant's Registration Statement on Form 10-SB, filed October
             1, 1999

3.04*        Certificate of Amendment to the Certificate of Incorporation of
             Registrant filed June 12, 1996, filed as an exhibit to
             Registrant's Registration Statement on Form 10-SB, filed October
             1, 1999

3.05*        By-laws of Registrant, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

4.01*        Form of Debenture, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

4.02*        Subordinated Debenture Extension Agreement, filed as an exhibit
             to Registrant's Registration Statement on Form 10-SB, filed
             October 1, 1999

4.03*        Debenture Extension Warrant, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

10.01*       Loan Agreement and associated documents dated July 10, 1998 with
             Premier Bank, for a $300,000 line of credit, filed as an exhibit
             to Registrant's Registration Statement on Form 10-SB, filed
             October 1, 1999

10.02*       Loan Agreement and associated documents dated July 10, 1998 with
             Premier Bank, for a $1,300,000 line of credit

10.03*       1996 Stock Incentive Plan, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

10.04*       1999 Stock Incentive Plan, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

10.05*       Employee Stock Purchase Plan, filed as an exhibit to Registrant's
             Registration Statement on Form 10-SB, filed October 1, 1999

10.06*       Employment Agreement of John Kane dated December 1, 2000, filed
             December 28, 2000

10.07+       Audit Committee Charter

21.01*       List of Subsidiaries of Registrant, filed as an exhibit to
             Registrant's Registration Statement on Form 10-SB, filed October
             1, 1999


* Incorporated herein by reference
+ Filed herewith


(b)  Reports on Form 8-K:  No reports on Form 8-K were filed during the last
quarter of the period covered by this report.



<PAGE>
SIGNATURES



In accordance with Section 13 or 15(d) of the Securities 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/ John Kane
        ---------------------------------
        John Kane, President, CEO, Treasurer,
        And Principal Accounting Officer

DATED:  December 28, 2001
        ---------------------------------


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the date indicated.



<TABLE>
<S>                           <C>                             <C>
 Signature                        Title                          Date
---------                        -----                          ----

BY: /s/ James Saltzman           Chairman of the Board of       December 28, 2001
    ---------------------        Directors                      ----------------
    James Saltzman

BY: /s/ Charles J. Searock Jr.   Secretary                      December 28, 2001
    --------------------------                                  ----------------
    Charles J. Searock, Jr.

BY: /s/ John Kane                President, CEO and             December 28, 2001
    ---------------------        Treasurer (Principal           -----------------
    John Kane                    Financial Officer and
                                 Principal Accounting Officer)

BY: /s/ Jan Melles               Director                       December 28, 2001
    ---------------------                                       -----------------
    Jan Melles

BY:                              Director
    ---------------------                                       -----------------
    Nathan Schwartz

BY: /s/ Peter P. Bihuniak        Director                       December 28, 2001
    ---------------------                                       -----------------
    Dr. Peter P. Bihuniak

BY: /s/ Robert Lear              Director                       December 28, 2001
    ---------------------                                       -----------------
    Robert Lear
</TABLE>