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, 2000

[ ] 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
         ------------------------------------------------------------
                (State or other jurisdiction of incorporation)

                                 22-1734088
                      -------------------------------
                     (IRS Employer Identification No.)

               385 Cooper Road, West Berlin, New Jersey, 08091
          ----------------------------------------------------------
                 (Address of principal executive offices)

                             (856) 767-4600
            --------------------------------------------------
            (Registrant's telephone number, including area code)
                                 None
        ----------------------------------------------------------
       (Securities registered pursuant to Section 12(b) of the Act)

                 Common Stock Par Value $0.0005 Per Share
                  --------------------------------------
                              Title of Class
        ----------------------------------------------------------
       (Securities registered pursuant to Section 12(g) of the Act)

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: $3,726,953

The number of shares of Common Stock outstanding as of November 30, 2000 was
2,356,766 shares.

The aggregate market value of voting stock of the registrant held by
non-affiliates as of November 30, 2000 was approximately $1,920,087.

Transitional small business format   Yes __ No X

<PAGE>


PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL OVERVIEW
----------------

Business Development

     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.

     On September 30, 1997, we sold substantially all of the assets of our
wholly-owned subsidiary, Hibshman Corporation, to Gary Edmonson and Patricia
Catron, who were employees of Hibshman Corporation. As consideration for the
sale, the Company received a note receivable of $200,000, which was collected
during fiscal year ended September 30, 1998. The sale resulted in a loss of
$194,453. The purchase price was based on 60% of the appraised value of the
assets that were acquired.

     We had acquired Hibshman Corporation on October 1, 1993 in exchange for
172,932 shares of our common stock. The business of Hibshman Corporation was
to polish the fused silica blanks supplied by manufacturers such as Dynasil,
into finished product. As such, Hibshman Corporation was acquired to extend
our business into the finished goods market. However after we acquired
Hibshman Corporation, it never generated sufficient sales to offset its cost
of operation. Furthermore, an infusion of capital was necessary to modernize
the equipment and processes of Hibshman Corporation. In the fall of 1997, we
commenced efforts to sell Hibshman Corporation by advertising it for sale
throughout the appropriate business community. Although there were several
interested buyers, none of these buyers made a sufficient offer. Subsequently,
Edmonson and Catron made an offer, which was better than the previous offers,
and at least twice the liquidation value of the equipment. In view of the
continual losses, we believed that the decision to sell Hibshman Corporation,
although at a loss, was in our best long-term interests.

     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

                                       1
<PAGE>


          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.

     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
across the quality and price spectrum.  We have significantly improved our
delivery times since entering into an agreement with Corning, Inc. that
enables us to provide product at all quality levels from our in-house
inventory.  We have been able to increase sales across the board, but most
importantly, have penetrated new market segments by offering quicy delivery on
a wider variety of products.

      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, Grimes Aerospace Company, VLOC, Inc., Spectra Physics, Zygo
Corporation, and Carl Zeiss each accounted for approximately 7.5%, 6.8%, 5.4%,
5.3% and 4.9% respectively, of our revenues during fiscal year 2000.
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.



                                     2
<PAGE>


    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 approximately $400,000 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 involved developing
larger furnaces in order to produce larger fused silica boules, and replacing
existing furnaces with updated equipment. We have spent approximately
$1,300,000 to develop the larger furnaces and upgrade existing furnaces. An
additional $400,000 was invested in additional glass processing equipment.
Investigations into use of purer raw material, alternative fuels and improved
distribution systems have been the primary emphasis of our research and
development program.



EMPLOYEES
---------

     Our total work force consist of 26 employees; 4 administrative, 2 sales,
and 20 shop personnel (including 1 part time employee).

     The shop currently is non-union. The workforce had originally been
members of the Teamsters Union, but voluntarily decertified in the early
1980's. From then until 1989 an "in-house" union represented the workforce. In
1989 this representation was voted out and the shop became non-union.

Employee Benefit Plans

	We have adopted a Stock Incentive Plan that provides for, among other
incentives, granting to officers, directors, employees and consultants options
to purchase shares of our common stock up to a total of 900,000 shares. The
900,000 shares consist of two separate plan approvals. The first plan was
approved in February 1996 for 450,000 shares, restated to reflect the stock
splits of 1996. The seconded plan approval was January 1999 for an additional
450,000 shares. At September 30, 2000, 577,523 shares of common stock were
reserved for issuance under the Stock Incentive Plans. 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, 2000, 126,977 options were outstanding.



                                    3
<PAGE>

     We have 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, 58,097 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.

     The Company has a 401K Plan for the benefit of its employees. The Company
did not make a contribution for the years ended September 30, 2000, or 1999.

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.

Leases



     We lease office equipment and four storage containers at an annual total
lease obligation of $7,542. We also have entered into lease purchase
agreements for a retro-fit of a glass saw, an ID slicing saw, and an
interferometer for a total annual lease obligation of $81,816.

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.



                                    4
<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, 1999 and September 30, 2000 were as
follows:

  Fiscal Quarter        High Bid Price        Low Bid Price
  --------------        --------------        -------------
       1999
       First              $2.00                 $0.875
       Second              1.50                  1.00
       Third               1.375                 0.75
       Fourth              1.125                 0.625

       2000
       First              $ .625                $0.375
       Second              1.80                  1.40
       Third               1.40                  1.40
       Fourth              2.3125                1.0625

     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, 2000, there were 2,356,668 shares of common stock
outstanding held by approximately 489 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).

     At September 30,2000, 577,523 shares of common stock were reserved for
issuance under the Stock Incentive Plans. 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, 2000, 126,977 options were outstanding.



     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.


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

     The market recoveries in the semi-conductor, optics and laser industries
fueled the turn around the Company experienced in fiscal year 2000. Demand for
fused silica is strong. The Company's sales for the fiscal year ended
September 30, 2000 were $3,726,953 an increase of $919,644, or 32.7%, from
sales of $2,807,309 for the fiscal year ended September 30, 1999. Included in
this increase was a 30% increase in international sales for fiscal year ended

                                    5
<PAGE>



September 30,2000. The above sales generated a net income of $144,206 for
fiscal year 2000 and a loss of $315,555 for fiscal year 1999. Since the 2nd
quarter of fiscal year 1999 the Company has experienced a gradual and steady
increase in both shipments and net income. We believe this trend will
continue. First quarter fiscal year 2001 sales and income are expected to
exceed prior historical results.

Results of Operations

Comparison of Fiscal Year ended September 30, 2000 to Fiscal Year ended
September 30, 1999

     Revenues increased to $3,726,953 for fiscal 2000 from $2,807,309 for
fiscal 1999. The increase of $919,644 or 32.7% reflects the continuing
improvement in the semiconductor, optics and laser markets.  International
sales also played a key role in the increase. Revenues from international
shipments increased to $712,579, 19% of sales, for fiscal year 2000, from
$210,391, 7.4% of sales, for fiscal year 1999. This was an increase of 30%
from fiscal 2000 to fiscal 1999. Instrumental in the overall increase was our
aggressive sales plan to increase our face-to-face contact with existing and
former customers. This resulted in increased purchases from existing customers
as well as the return of twelve former customers. We believe that the strong
demand for fused silica will continue into the next fiscal year.


     Cost of sales increased to $2,677,784 or 71.8% of sales for fiscal year
2000 from $2,294,115 or 81.7% of sales for fiscal year 1999. The improvement
in cost of sales as a percentage of revenues from fiscal year 1999 to fiscal
year 2000, a decrease of 12%, was a direct result of increased volume covering
a consistent fixed cost, while controlling increases in variable cost.
Management continues to closely track operating expenses, including manpower.
The increased production in the shop was obtained by adding only 1 shop
employee.


     Gross margin increased to $1,049,169 or 28.2% of revenues, for fiscal
year 2000 from $513,194 or 18.3% of revenues for fiscal year 1999. The
increase of $535,975, or 104.4%, 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 increased to $704,004 or
18.9% of revenues, for fiscal year 2000 from $634,925 or 22.6% of revenues,
for fiscal year 1999. This was an increase of $69,079 or 10.8%. Major
contributors to the increase were an increase in sales commissions directly
related to the increased international sales, increased travel expenses and
increased legal and accounting expenses, associated with reporting
requirements.

     Interest Expense decreased to $192,512 or 5.2% of revenue for fiscal year
2000 from $194,437 or 6.9% of revenues for fiscal year 1999. The decrease of
$1,925 was not material.

Net income increased to income of $144,206 or 3.9% of revenue, for
fiscal year 2000 from a loss of $315,555 or 11.2% of revenue for fiscal year
1999. The improvement is a swing of $459,761 from fiscal year 1999 to fiscal
year 2000.


                                    6
<PAGE>

     The Company has no provisions for income taxes for either fiscal 2000 or
1999. As of September 30, 2000 we have approximately $790,000 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 $214,000 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 $329,506 for
fiscal year 2000, from $209,052 for fiscal year 1999. The increase of $120,454
was due primarily to the increase in net income from fiscal year 1999 to
fiscal year 2000 of $459,761, offset by the increase in Accounts Receivable
from fiscal year 1999 to fiscal year 2000 of $211,986.

     Cash flows used in investing activities increased to $67,787 for fiscal
year 2000, from $4,333 for fiscal year 1999. The increase of $63,454 was
directly related to increases in purchase of property, plant and equipment.

Cash flows used in financing activities increased to $152,277 for fiscal
year 2000, from $110,446 for fiscal year 1999. The increase of $41,831 was a
result of an increase of $18,649 in reduction of long term debt offset by a
reduction in funds received as a result of issuance of common stock of
$23,182.

In August 1997 the Company received an additional $200,000 on an
existing mortgage. The funds were used for improvements to our furnaces. In
August 1998 the Company consolidated all existing bank debt into a term loan
of $1,300,000 and a Line of Credit of $300,000. In July 1999 the Line of
Credit was decreased to $150,000.  As of September 30, 2000, the term loan has
an outstanding balance of $1,119,445 and the line has a zero balance. We have
various obligations under three capital leases, which aggregate $82,349 as of
September 30, 2000. The indebtedness outstanding under the term loan is
collateralized by all of our assets. The underlying equipment collateralizes
the obligations under each of the respective capital leases.

     During fiscal years 2000 and 1999 no funds were generated from the
exercise of stock options owned by affiliates of the Company. During fiscal
years 2000 and 1999 we generated $3,790 and $26,972, respectively, from shares
purchased by employees through the Employee Stock Purchase Plan.

     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

                                    7
<PAGE>

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.

                                    8
<PAGE>


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, 2000 and 1999, 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 generally accepted auditing
standards.  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, 2000 and 1999 and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.


HAEFELE, FLANAGAN & CO, p.c.

Moorestown, New Jersey
November 6, 2000



                                            9
<PAGE>



                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2000 AND 1999

                                     ASSETS
<TABLE>
<S>                                                      <C>              <C>
                                                               2000            1999
                                                           ----------      ----------
Current assets
   Cash and cash equivalents                                $ 249,695      $  140,253
   Accounts receivable, net of allowance for doubtful
    accounts of $6,000 and $10,883 for 2000 and 1999          608,488         370,839
   Inventories                                                909,223         958,023
   Prepaid expenses and other current assets                   32,596          46,599
                                                           ----------      ----------
        Total current assets                                1,800,002       1,515,714

Property, Plant and Equipment, net                          1,838,599       2,064,029

Other Assets                                                   20,534          22,539
                                                           ----------      ----------
        Total Assets                                       $3,659,135      $3,602,282
                                                           ==========      ==========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

                                                              2000            1999
                                                           ----------      ----------
Current Liabilities
   Current portion of long-term debt                          147,859         142,976
   Accounts payable                                           101,871          92,464
   Accrued expenses and other current liabilities             165,751         152,534
                                                           ----------      ----------


        Total current liabilities                             415,481         387,974

Long-term Debt, net                                         1,620,885       1,739,535

Stockholders' Equity
   Common Stock, $.0005 par value, 25,000,000 shares
    authorized, 2,997,292 and 2,985,566 shares issued,
    2,356,668 and 2,344,942 shares outstanding
    for 2000 and 1999, respectively                             1,499           1,493
   Additional paid in capital                               1,062,309       1,058,525
   Retained earnings                                        1,518,264       1,374,058
                                                     ----------      ----------
                                                            2,582,072       2,434,076

   Less 640,624 shares of treasury stock, at cost            (959,303)       (959,303)
                                                           ----------      ----------
        Total stockholders' equity                          1,622,769       1,474,773
                                                           ----------      ----------
        Total Liabilities and Stockholders' Equity         $3,659,135      $3,602,282
                                                           ==========      ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                           10
<PAGE>


                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

<TABLE>
<S>                                             <C>                 <C>
                                                 2000                1999
                                                 ----------          ----------

Net sales                                       $3,726,953          $2,807,309
Cost of sales                                    2,677,784           2,294,115
                                                 ----------          ----------
Gross profit                                     1,049,169             513,194
Selling, general and administrative                704,004             634,925
                                                 ----------          ----------
Income (loss) from operations                      345,165            (121,731)
Other income (expense)
     Interest expense                             (192,512)           (194,437)
     Other income (expense), net                    (8,447)                613
                                                 ----------          ----------
                                                  (200,959)           (193,824)
                                                 ----------          ----------
Income(loss)before provision for income taxes      144,206            (315,555)

Provision for income taxes                               0                   0
                                                 ----------          ----------
Net income (loss)                                  144,206            (315,555)

                                                 ==========          ==========

Basic net income (loss) per common share       $      0.06         $  (   0.14)
                                                 ==========          ==========

Diluted net income (loss) per common share     $      0.06         $  (   0.14)
                                                 ==========          ==========


</TABLE>

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


                                            11
<PAGE>


                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<S>                                         <C>            <C>          <C>              <C>
                                                                         Additional
                                                                           Paid-in        Retained
                                                Shares       Amount        Capital        Earnings
                                              ---------      ------      ----------      ----------

Balance, October 1, 1998                      2,947,649      $1,474      $1,028,197      $1,689,613

Issuance of shares of common stock under
 employee stock purchase plan                    34,917          17          26,955               0

Issuance of shares of common stock as
 employee stock compensation                      3,000           2           3,373               0

Net Loss                                              0           0               0        (315,555)
                                              ---------       -----         -------       ---------
Balance, September 30, 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
                                              =========      ======      ==========      ==========

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


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

Balance, October 1, 1998                          640,624      ($959,303)       1,759,981

Issuance of shares of common stock under
 employee stock purchase plan                           0              0           26,972

Issuance of shares of common stock as
 employee compensation                                  0              0            3,375

Net Loss                                                0              0         (315,555)
                                                  -------      ----------     -------------
Balance, September 30, 1999                       640,624      ($959,303)      $1,474,773


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

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

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
                                            12
<PAGE>



                 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<S>                                                         <C>                <C>

                                                                  2000              1999
                                                               ---------        -----------

Cash flows from operating activities:
    Net income (loss)                                          $ 144,206       $   (315,555)
    Adjustments to reconcile net income to net
     cash provided by continuing operations
       Stock compensation expense                                      0              3,375
       Depreciation and amortization                             337,522            335,313
       Gain on sale of assets                                          0               (613)
       (Increase) decrease in:
         Accounts receivable                                    (237,649)           (25,663)
         Inventories                                              48,800            320,311
         Prepaid expenses and other current assets                14,003             (4,439)
       Increase (decrease) in:
         Accounts payable                                          9,407           (134,096)
         Accrued expenses and other current liabilities           13,217             30,419
                                                               ---------        -----------
Net cash provided by operating activities                        329,506            209,052
                                                               ---------        -----------

Cash flows from investing activities:
     Purchases of property, plant and equipment                 ( 66,384)           ( 7,633)
     Sale of property, plant and equipment                             0              3,300
     Other assets                                                 (1,403)                 0
                                                               ---------        -----------
Net cash used in investing activities                            (67,787)           ( 4,333)
                                                               ---------        -----------
Cash flows from financing activities:
     Repayment of long-term debt                                (156,067)          (137,418)
     Issuance of common stock                                      3,790             26,972
                                                               ---------        -----------
Net cash used in financing activities                           (152,277)          (110,446)
                                                               ---------        -----------
Net increase in cash and cash equivalents                        109,442             94,273
Cash and cash equivalents, beginning                             140,253             45,980
                                                               ---------        -----------
Cash and cash equivalents, ending                              $ 249,695        $   140,253
                                                               =========        ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                            13
<PAGE>












DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

NOTE 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 recognizes revenues as products are shipped.  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.





                                            14
<PAGE>











DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

Note 1   Summary of Significant Accounting Policies (continued)

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.  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, 2000 and 1999 was $3,408 and $3,408.  Accumulated
amortization as of September 30, 2000 and 1999 was $7,348 and $3,976.

Unearned Compensation

	Compensation resulting from shares granted under the Company's
employment contracts is recognized based on the market value of the shares on
the date of the grant. Initially the total market value of the shares is
treated as unearned compensation and then charged to expense over the
respective term of the contract. No stock compensation was recognized for the
year ended September 30, 2000. Stock compensation as of September 30, 1999 was
fully earned.

Advertising

       The Company expenses all advertising as incurred. Advertising expense
for the years ended September 30, 2000 and 1999 was $11,195 and $17,415.

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.

                                            15
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Income Per Share
Basic net income (loss) 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 (loss) per share.  The
computations of basic and diluted net income (loss) per share are as follows:

<TABLE>
<S>                                          <C>               <C>
2000	1999
----              ----
Net income (loss)                             $    144,206      ($   315,555)
                                                ==========       ============
Basic weighted average shares                    2,352,704         2,322,170
Effect of dilutive securities:
  Common stock options                                   0                 0
                                                -----------     ------------
                                              $  2,352,704        $2,322,170
                                                ===========     =============
Net income (loss) per share
   Basic                                      $        .06    ($         .14)
   Diluted                                    $        .06    ($         .14)
 </TABLE>

Diluted net income (loss) per share excludes the impact of common stock
options of 126,977 and 113,277 for 2000 and 1999, respectively, and common
stock warrants of 26,450 for 2000 and 1999, 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 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 for the years ended September 30, 2000 or 1999.


                                    16
<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999


Note 1   Summary of Significant Accounting Policies (continued)

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 8.

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 bank 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 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, 2000 and 1999, approximately $79,011
and $12,720 or 13% and 3% of the Company's accounts receivable are due from
foreign sales.

New Accounting Pronouncement

       Effective October 1, 1998, the company adopted the provision of SFAS
No. 130, "Reporting Comprehensive Income."  This statement requires companies
to classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a balance sheet. This statement did not have a material impact on
the Company's financial statements.


                                    17
<PAGE>


DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999


Note 1   Summary of Significant Accounting Policies (continued)

Change in Accounting Principle

	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.


Statement of Cash Flows



           For the purpose of the statement of cash flows, the Company
considers all highly liquid investments with a maturity of three months or
less to be cash equivalents.



NOTE 2   INVENTORIES

       Inventories at September 30, 2000 and 1999 consisted of the  following:

                                           2000               1999
 <TABLE>
<S>                                    <C>              <C>
Raw Materials                          $  22,887        $     21,777
Work-in Process                          747,802             800,395
Finished Goods                           138,534             135,851
                                         --------         ----------
                                        $909,223        $    958,023
                                         ========         ==========
 </TABLE>








                                            18

  <PAGE>





DYNASIL CORPORATION OF AMERICAN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999


NOTE 3   PROPERTY, PLANT AND EQUIPMENT

       Property, plant and equipment at September 30, 2000 and 1999 consist of
the following:

                                      2000             1999
<TABLE>
<S>                                   <C>               <C>

Land                                  $      261        $      261
Building and improvements              2,479,576         2,445,639
Construction in progress                  57,911            57,911
Machinery and equipment                2,834,900         2,773,915
Office furniture and fixtures            225,535           219,442
Transportation equipment                  53,419            45,751
                                       ---------        ----------
                                       5,651,602         5,542,919
Less accumulated depreciation          3,813,003         3,478,890
                                       ---------        ----------
                                     $ 1,838,599        $2,064,029
                                       =========        ==========
 </TABLE>

       Included in the cost of machinery and equipment at September 30, 2000
and 1999 is $233,275 and $190,744 representing the cost of assets under
capitalized lease obligations.  Accumulated depreciation at September 30, 2000
and 1999 for the capitalized leases was $24,037 and $33,635.

       Depreciation expense for the years ended September 30, 2000 and 1999
was $334,114 and $331,905, of which $57,672 and $19,075 represented
depreciation of assets under capitalized lease obligations.




NOTE 4   NOTE PAYABLE TO BANK

	Note payable to bank is provided under a $150,000 line of credit
agreement. Advances under the line are due on demand with interest at the
Bank's prime rate plus 1% (10.5% and 9.25% at September 30, 2000 and 1999).
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, 2000 and 1999, the full amount was available.











                                            19
<PAGE>




DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999


NOTE 5   LONG-TERM DEBT


       Long-term debt at September 30, 2000 and 1999 consist of the
following:


<TABLE>
<S>                                                  <C>                <C>
                                                       2000                    1999

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

Subordinated debenture bearing interest at 10%
  per annum payable semiannually, due June 1,
  2002, unsecured                                         216,610            218,100

Note payable to bank in monthly installments of
  $7,222 plus interest at the bank's prime rate plus
  1.0% (10.5% and 9.25% at September 30, 2000
  and 1999), 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                1,119,445          1,206,112

 Capital lease obligations payable in total
  monthly installments of $6,818 in 2000 and $5,415
  in 1999, including interest rates ranging from
  9.5% to 14% due July 2001 and March 2003, secured
  by Equipment                                             82,349            107,949
                                                       ----------        ----------
                                                        1,768,744          1,882,511

Less current portion                                   (  147,859)       (   142,976)
                                                       ----------        ----------
                                                      $ 1,620,885       $  1,739,535
                                                       ==========        ==========


</TABLE>

       The current portion includes $61,191 and $56,316 payable under capital
lease obligations at September 30, 2000 and 1999.

                                            20
<PAGE>







DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

Note 5   Long-Term Debt (continued)

The aggregate maturities of long-term debt, including capital lease
obligations as of September 30, 2000 are as follows:
                                            Capital Lease        Long-Term
                               Total          Obligations             Debt
                               -----         ------------     --------------
<TABLE>
<S>                           <C>             <C>               <C>
September 30, 2002             $   668,737    $    15,120        $  653,617
September 30, 2003                  92,704          6,037            86,667
September 30, 2004                  86,667            -0-            86,667
September 30, 2005                  86,667            -0-            86,667
September 30, 2006 and beyond      686,110            -0-           686,110
                               -----------     ----------        ----------
                               $ 1,620,885     $   21,157        $1,599,728
                               ===========     ==========        ==========
 </TABLE>

NOTE 6   INCOME TAXES

       The Company's provision for income taxes (benefit) for the years ended
September 30, 2000 and 1999 are as follows:
                                            2000               1999
<TABLE>
<S>                                     <C>                 <C>
Current
   Federal                               $ 43,700             $ -0-
   State                                   15,300               -0-
                                          ---------           ---------
                                        59,000             $    -0-

Deferred
   Federal                                (43,700)              -0-
   State                                  (15,300)              -0-
                                         ---------            ---------
                                         $    -0-          $    -0-
                                         =========            =========
</TABLE>

The reasons for the difference between total tax expense and the amount
computed by applying the statutory federal income tax rates to income before
provision for income taxes at September 30, 2000 and 1999 are as follows:
                                            2000                   1999
<TABLE>
<S>                                          <C>                 <C>
   Taxes at statutory rates applied to
  income before provision for income
  Taxes                       		     $ 40,700            $     -0-


Increase (reduction) in tax resulting
  from:
    Depreciation                               9,300                  -0-
    Inventories                                2,050                  -0-
    Accounts receivable                      ( 1,380)                 -0-
    Vacation pay                            (  2,660)                 -0-
    State income taxes                        11,000                  -0-
    Net operating loss carryforwards        ( 59,010)                 -0-
                                             --------          ----------
                                            $   -0-             $     -0-
                                             ========         ===========
</TABLE>

                                         21
<PAGE>


DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

Note 6   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, 2000 and 1999 are as follows:

2000	1999
<TABLE>
<S> 							<C>			<C>
Inventories                                  $  48,500        $   45,600
Vacation pay                                     6,500            10,300
Accounts receivable                              2,400             4,300
Depreciation                                (  164,300)      (   162,800)
Net operating loss carryforwards               288,600           363,000
Less valuation allowance                    (  181,700)      (   260,400)
                                            -----------     ------------
                                             $     -0-        $      -0-
                                            ===========     ============
 </TABLE>
       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, 2000, the Company
has approximately $790,000 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
$214,000 of net operating loss carryforwards to offset certain future state
taxable income, expiring in various years through 2007.


NOTE 7   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 900,000 shares, of which 577,523
shares of common stock are available for future purchases under the plan at
September 30, 2000.

	During the year ended September 30, 1999, 3,000 shares of common stock
were issued for services rendered at $1.125 per share for a total of $3,375.




                                         22
<PAGE>

DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999


Note 7   Stockholders' Equity (continued)

Stock Based Compensation (continued)

During the years ended September 30, 2000 and 1999, 21,000 shares were granted
annually with exercise prices of $.56 per share in 2000 and $1.17 per share in
1999, representing the fair market value on the date of grant.  During the
year ended September 30, 2000 and 1999 no options were exercised. The Company
canceled 7,300 and 96,500 options to former employees during the years ended
September 30. 2000 and 1999 respectively. Compensation expense relating to
non-employee stock options granted during the years ended September 30, 2000
and 1999 was $-0-.

       A summary of stock option activity for the years ended September 30,
2000 and 1999 is presented below:
<TABLE>
<S>                                                         <C>         <C>

                                                                            Per Share
                                                               Shares       Exercise Price

Options outstanding at October 1, 1998                         188,777	  $1.17 - $4.25

Granted in 1999                                                 21,000         $1.17
Cancelled in 1999                                           (   96,500)   $1.00 - $3.52
                                                            ----------
Options outstanding at September 30, 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
                                                             ==========
Options exercisable at September 30, 2000                      126,977 	  $ .56 - $4.25
                                                             ==========
</TABLE>


       At September 30, 2000 and 1999, the Company had warrants outstanding to
purchase 26,450 shares of the Company's common stock at exercise prices of
$4.00 and $3.00 per share, exercisable through June 1, 2002.  No warrants were
exercised during the years ended September 30, 2000 and 1999.



                                         23
<PAGE>










DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999

Note 7   Stockholders' Equity (continued)

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 2000 and 1999 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:

                                                  2000            1999
<TABLE>
<S>                                           <C>              <C>

Net income (loss)                               $119,216        ( $323,115)

Basic net income (loss) per common share:       $    .06 	( $    .14)
</TABLE>

       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 2000 and 1999.

                                        2000           1999
<TABLE>
<S>                                    <C>            <C>

Expected life of option in years         5.0             5.0
Risk-free interest rate                  6.1%            6.0%
Expected volatility                     48.8%           21.9%
Dividend yield                           0.0%            0.0%
</TABLE>

       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.

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, 2000 and 1999, 11,726, and 34,917 shares of
common stock were issued under the plan for aggregate purchase prices of
$3,790, and $26,972, respectively.


24
<PAGE>
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999




NOTE 8   PROFIT SHARING PLAN

       The Company has a 401k Plan for the benefit of its employees.  The
Company did not make a contribution to the plan during the years ended
September 30, 2000 and 1999.


NOTE 9   RELATED PARTY TRANSACTIONS

       The Company paid consulting fees to other stockholders/directors
totaling $1,529 and $1,603 during the years ended September 30, 2000 and 1999.


NOTE 10   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                          		              2000	     1999
<TABLE>
<S>                                          <C>               <C>
Cash paid during the year for:
   Interest                                  $   192,512       $  199,437

Noncash investing and financing activities:

     Acquisition of property, plant and
       equipment                             $   108,684       $   7,633
     Debt incurred                           (    42,300)             -0-
                                             ------------     ----------
     Cash paid for property and equipment    $    66,384       $   7,633
                                             ============     ==========
</TABLE>

                                         25
<PAGE>


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

     Each of our seven directors was elected to serve for one year at our
Annual meeting of the shareholders held on February 1, 2000, and will hold
office until their successors are elected at the next annual meeting of the
shareholders. On July 21, 2000 Mr. Robert E. Hibshman, Sr. resigned his
position on the board due to competing business interests and a desire to
phase into full retirement.  His position on the Board of Directors will not
be filled at this time, thus reducing Board membership to six.

       The information concerning the officers and Directors is as of December
18, 2000.  On December 1, 2000, John Kane was appointed President of the
Company, and assumed primary responsibility for the day to day operations of
the Company.  Charles J. Searock, Jr., the previous President, retained his
position as CEO of the Company, and will devote the majority of his time to
business development.

     Our executive officers and directors, and their ages at December 18,
2000, are as follows:

Name                                Age       Position
----                                ---       --------
James Saltzman                      56        Chairman of the Board
Gen. Charles J. Searock, Jr.        64        CEO, Director, Secretary
Mr. John Kane                       49        President, CFO,
                                              Treasurer
Jan Melles                          60        Director
Nathan Schwartz                     39        Director
Dr. Peter P. Bihuniak               51        Director
Mr. Robert Lear                     55        Director
Mr. Bruce Leonetti                  46        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 2000 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.  Saltzman Partners, L.P., an investment firm of which Mr.
Saltzman is a limited partner and a special general partner and from 1982
until July 2000 was managing general partner, owns 609,615 shares of Dynasil
common stock. 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.  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, the Court entered Order of Preliminary Injunction, pending final
determination of the action on the merits, to which Mr. Saltzman consented
without admitting or denying the allegations of the complaint, and without
waiver of any rights or defenses or the ability to challenge any request for
relief.  The preliminary injunction arises out of the SEC's complaint which
alleges improprieties by Mr. Saltzman with respect to approximately $1.78
million of partnership funds loaned to Mr. Saltzman from Saltzman Partners,
L.P., during the period when Mr. Saltzman was managing general partner of
Saltzman Partners, L.P.   The preliminary injunction, in part, enjoins Mr.
Saltzman from violations of the anti-fraud provisions of the Securities Act of
1933, the Securities Exchange Act of 1934, and the Investment Advisor's Act.

     Lt. General Charles J. Searock, Jr. (USAF Ret), 64, has been a director
of the Corporation since February 1996, was President of the Corporation from
1996 to December 1, 2000, and currently serves as CEO and 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.


                                    26
<PAGE>


     John Kane, 49, President, Treasurer and Chief Financial Officer, has been
with Dynasil Corporation since January 1997. Prior to 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.

     Jan Melles, 60, 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, 39, 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 M.B.A. in Public/Private Management
from Columbia University in 1986, and a J.D. from the University of Pittsburgh
in 1989.

    Dr. Peter P. Bihuniak, 51, 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, 55, 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, 46, Vice President - Sales and Marketing has been with
Dynasil Corporation since January 1999. He was previously with the Company for
14 years prior to 1993 when he left for a position as a development officer
with the University of Pennsylvania.

                                    27

<PAGE>



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. *   2000 	 147,116
Searock,       1999      122,703
President,     1998      124,797
CEO



John       *   2000     100,327
Kane,          1999      83,339                                        2,625
Secretary,     1998      88,289          1,118                         6,000
Treasurer,
CFO


Bruce          2000      90,712
Leonetti,      1999      65,042
VP

 * Effective December 1, 2000, Charles J. Searock relinquished the position of President, and John Kane assumed such
   position.

</TABLE>

                                         28
<PAGE>


Employment Agreements

     The three-year employment agreement with Charles J. Searock, Jr., 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, Mr. Searock has agreed to work for us full time as CEO, and
receives an annual base salary of $125,000. Mr. Searock'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 three-year non-competition provisions that prohibit him from
competing with us.  John Kane will assume the position of CEO on August 1,
2001, and it is anticipated that Mr. Searock will retire at the end of the
current term.

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 has also agreed to assume 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.


                                    29
<PAGE>


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, 2000 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>
<CAPTION>

Title      Name and Address             No. of Shares and nature of   Percent of
of Class   of Beneficial Owner          Beneficial Ownership(1)       Class
--------   -------------------          ---------------------------   ----------
<S>        <C>                          <C>                           <C>
Common     James Saltzman(2)            646,985                       27.26%
           621 East Germantown Pike
           Suite 105


           Plymouth Valley PA  19401

Common     Gen. Charles J. Searock,      83,499                        3.53%
            Jr. (USAF Ret) (3)
           39 Tee Pee Court
           Medford, NJ   08055

Common     Jan Melles(4)                 59,500                        2.52%
           9 Riverside Road
           Laguna Niguel, CA   92677

Common     Nathan Schwartz(5)            51,394                        2.15%
           621 East Germantown Pike
           Suite 105
           Plymouth Valley, PA 19401

Common     Dr. Peter P. Bihuniak(6)      19,000                        0.80%
           631 Scenic Circle
           Holland, OH   43528

Common     Robert Lear(7)               176,236                        7.45%
           420 South York Road
           Hatboro, PA   19040

Common     John Kane(8)                  15,425                        0.65%
           149 Plowshare Road
           Norristown, PA  19403

Common     Bruce Leonetti                10,300                        0.44%
           200 Birdwood Avenue
           Haddonfield, NJ   08033

All Officers and Directors
as a Group                            1,062,339                       43.21%

</TABLE>

                                    30
<PAGE>


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

(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 September 30, 2000 was
2,356,668.

(2) Includes options to purchase 7,500 shares of the Company's common stock at
$1.00 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, and options to purchase 3,000 shares of the
Company's common stock at $.56 per share; also includes 609,365 shares owned
by Saltzman Partners.

(3) 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.



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

(5) Includes options to purchase 20,000 shares of the Company's common stock
at $1.50 per share, options to purchase 5,000 shares of the Company's common
stock at $1.50 per share, 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, and options to purchase 3,000
shares of the Company's common stock at $.56 per share.

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

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

(8) Includes options to purchase 5,500 shares of the Company's common stock at
$2.65 per share.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


  NONE.


                                         31
<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
             herewith

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

27.01        Financial Data Schedule


                                    32
<PAGE>


* Incorporated herein by reference



(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.


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, Treasurer, Chief Financial
        Officer and Principal Accounting Officer

DATED:  December 28, 2000
        ---------------------------------


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>

Signature                        Title                          Date
---------                        -----                          ----
<S>                             <C>                            <C>
BY: /s/ James Saltzman           Chairman of the Board of       December 28, 2000
    ---------------------        Directors                      ----------------
    James Saltzman

BY: /s/ Charles J. Searock Jr.   CEO, Secretary and             December 28, 2000
    --------------------------   Director                       ----------------
    Charles J. Searock, Jr.

BY: /s/ John Kane                President,                     December 28, 2000
    ---------------------        Treasurer and Chief            -----------------
    John Kane                    Financial Officer
                                 (Principal Financial)
                                 Officer and Principal
                                 Accounting Officer)

BY: /s/ Jan Melles               Director                       December 28, 2000
    ---------------------                                       -----------------
    Jan Melles

BY: /s/ Nathan Schwartz          Director                       December 28, 2000
    ---------------------                                       -----------------
    Nathan Schwartz

BY: /s/ Peter P. Bihuniak        Director                       December 28, 2000
    ---------------------                                       -----------------
    Dr. Peter P. Bihuniak

BY: /s/ Robert Lear              Director                       December 28, 2000
    ---------------------                                       -----------------
    Robert Lear

</TABLE>
                                         33
<PAGE>