Business Combination (Notes)

12 Months Ended

Sep. 30, 2014

Business Combination [Abstract]

Business Combination Disclosure [Text Block]

Business Combination

On August 29, 2014, the Company merged with IQinVision, Inc. (“IQinVision”), a California corporation, with IQinVision surviving as a wholly owned subsidiary of the Company (the “Merger”). In connection with the Merger, the Company issued 4,522,335 shares of its common stock to IQinVision shareholders, which represented 50% of the Company’s outstanding common stock at the date of the Merger. In addition, the Company assumed a total of 642,420 of IQinVision stock options and stock appreciation rights along with related 2001 and 2011 Stock Incentive Plan provisions at the date of merger.  The number and exercise prices of these equity instruments assumed were proportionately determined in accordance with a specified common stock exchange formula as to number and exercise price. The purchase price of the business combination at the date of closing was $14.9 million, consisting of 4,522,335 shares of Vicon common stock valued at $14.2 million on the date of issuance and assumed IQinVision stock options and stock appreciation rights valued at $723,000 in accordance with Financial Accounting Standards Board ASC 718. In connection with the Merger, the Company incurred $1.1 million of transaction and other merger related costs that were expensed in 2014 and, on September 12, 2014, paid a special cash dividend of $0.55 per share ($2.5 million in the aggregate) to Company shareholders of record as of July 11, 2014.

The Merger has been accounted for using the acquisition method of accounting and the Company has been treated as the acquirer for accounting purposes. This determination was made in accordance with the applicable accounting guidance based upon numerous factors including, but not limited to, the relative ownership of the combined company by the Company and former IQinVision shareholders, the composition of the management team and board of directors of the combined company, the structure of the Merger in which IQinVision became a wholly owned subsidiary of the Company, the location of the corporate offices of the combined company, and the continued listing of the Company’s common stock on the NYSE MKT.

The table below details the consideration transferred to acquire IQinVision:

	Conversion Calculation		Estimated Fair Value
Vicon Industries, Inc. shares of common stock issued at merger	4,522,335
Per share price (ex-dividend) of Vicon Industries, Inc. common stock at August 29, 2014	$	3.13	$	14,154,909
Estimated fair value of vested IQinVision Stock Options assumed (1)			570,873
Estimated fair value of vested IQinVision SAR's assumed (1)			152,199
Estimated purchase price consideration			$	14,877,981

(1) The fair value was determined using the Black-Scholes valuation model. Assumptions used are the same as those for acquired awards as disclosed in Note 1 of Notes to Consolidated Financial Statements.

The transaction has been accounted for using the acquisition method of accounting which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the allocation of the purchase price as of the acquisition date:

	August 29, 2014
Fair value of net assets acquired	$	4,791,512
Intangible assets	4,070,000
Goodwill	6,016,469
Net assets acquired	$	14,877,981

The following table is a summary of the fair value estimates of the identifiable intangible assets as of September 30, 2014 and their useful lives:

	Useful Life (years)	Estimated Fair Value
Technology	10	$	2,500,000
Customer relationships	7	910,000
Trademarks	15	660,000
		$	4,070,000

Critical estimates in valuing certain intangible assets include but are not limited to estimating future expected cash flows from assets acquired and determining discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for the acquisition may change as additional information becomes available.

The goodwill recognized is attributable primarily to expected synergies and other benefits that the Company believes will result from combining the operations of IQinVision with the operations of the Company. The $6.0 million goodwill that was acquired is not expected to be deductible for income tax purposes.

Actual and Pro Forma Results

The amounts of revenue and net loss of IQinVision included in the Company’s consolidated statement of operations from the August 29, 2014 acquisition date to September 30, 2014 are as follows:

Revenue	$	1,840,216
Net loss	$	(187,948	)

The unaudited pro-forma results presented below include the effects of the IQinVision merger as if it had been consummated as of October 1, 2012. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it indicative of future operating results. The pro forma information does not include any adjustment for potential revenue enhancements, cost synergies or other operating efficiencies that could result from the merger and excludes transaction costs relating to the merger as they are non-recurring.

	Year Ended September 30,
	2014			2013
Pro forma revenue	$	48,883,999		$	60,395,083
Pro forma net income (loss)	$	(9,132,109	)	$	869,648
Pro forma basic earnings (loss) per share	$	(1.86	)	$	.10
Pro forma diluted earnings (loss) per share	$	(1.86	)	$	.10