-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Al0+KElgX2canXZJ2LckRb4WYEqexGUDdTgTaQ9ZANghqJFGgQgN3HXu/G3wNJXp e+TujxmX+L+JncoT/RxDjg== 0000310056-97-000006.txt : 19970520 0000310056-97-000006.hdr.sgml : 19970520 ACCESSION NUMBER: 0000310056-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICON INDUSTRIES INC /NY/ CENTRAL INDEX KEY: 0000310056 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 112160665 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07939 FILM NUMBER: 97606472 BUSINESS ADDRESS: STREET 1: 525 BROAD HOLLOW RD CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5162932200 MAIL ADDRESS: STREET 1: 525 BROAD HOLLOW ROAD CITY: MELVILLE STATE: NY ZIP: 11747 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1997 Commission File No. 1-7939 ------------------------- ------- VICON INDUSTRIES, INC. (Exact name of registrant as specified in its charter) NEW YORK STATE 11-2160665 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 89 Arkay Drive, Hauppauge, New York 11788 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 952-2288 (Former name, address, and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 At March 31, 1997, the registrant had outstanding 2,802,728 shares of Common Stock, $.01 par value. PART I - FINANCIAL INFORMATION VICON INDUSTRIES, INC. AND SUBSIDIARIES (CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended 3/31/97 3/31/96 Net sales........................... $12,327,871 $10,855,627 Costs and expenses: Cost of goods sold................ 8,935,576 8,107,322 Selling, general & admin. expenses........................ 2,699,230 2,417,914 Relocation expense................ 225,129 - Interest expense.................. 260,985 184,967 Unrealized foreign exchange gain................... - (5,012) ----------- ----------- Total costs and expenses....... 12,120,920 10,705,191 Income before income taxes.......... 206,951 150,436 Provision for income taxes.................... 41,000 25,000 ----------- ----------- Net income.......................... $ 165,951 $ 125,436 =========== =========== Net income per share $ .06 $ .05 === === Weighted average number of shares outstanding and equivalent shares 2,939,024 2,762,828 See Notes to (Condensed) Consolidated Financial Statements. 2 PART I - FINANCIAL INFORMATION VICON INDUSTRIES, INC. AND SUBSIDIARIES (CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Six Months Ended 3/31/97 3/31/96 Net sales........................... $23,625,645 $21,368,095 Costs and expenses: Cost of goods sold................ 17,052,542 15,914,178 Selling, general & admin. expenses........................ 5,420,425 4,775,855 Relocation expense................ 225,129 - Interest expense.................. 524,933 420,338 Unrealized foreign exchange gain................... (33,623) (19,384) ----------- ----------- Total costs and expenses....... 23,189,406 21,090,987 Income before income taxes.......... 436,239 277,108 Provision for income taxes.................... 55,000 50,000 ----------- ----------- Net income.......................... $ 381,239 $ 227,108 =========== =========== Net income per share $ .13 $ .08 === === Weighted average number of shares outstanding and equivalent shares 2,893,674 2,762,828 See Notes to (Condensed) Consolidated Financial Statements. 3 VICON INDUSTRIES, INC. AND SUBSIDIARIES (CONDENSED) CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS 3/31/97 9/30/96 CURRENT ASSETS Cash............................................ $ 271,378 $ 205,876 Accounts receivable (less allowance of $526,000 at March 31, 1997 and $396,000 at September 30, 1996)............... 9,283,139 8,635,020 Other receivables............................... 100,024 71,819 Inventories: Parts, components, and materials.............. 2,889,182 2,175,408 Work-in-process............................... 2,665,058 1,391,552 Finished products............................. 10,807,387 11,135,798 ----------- ----------- 16,361,627 14,702,758 Prepaid expenses................................ 547,376 529,631 ----------- ----------- TOTAL CURRENT ASSETS............................ 26,563,544 24,145,104 - -------------------- Property, plant and equipment................... 14,192,502 13,640,198 Less: accumulated depreciation................. (10,867,251) (10,606,013) ----------- ----------- 3,325,251 3,034,185 Other assets.................................... 1,117,283 905,327 ----------- ----------- TOTAL ASSETS.................................... $31,006,078 $28,084,616 - ------------ =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Borrowings under revolving credit agreement..... $ 1,292,767 $ 959,583 Current maturities of long-term debt............ 175,602 203,719 Accounts payable: Related party................................. 7,498,933 7,457,482 Other......................................... 2,692,821 1,811,730 Accrued wages and expenses...................... 1,749,246 1,229,087 Income taxes payable............................ 145,913 87,205 Deferred gain on sale and leaseback............. - 332,100 ------------ ----------- TOTAL CURRENT LIABILITIES 13,555,282 12,080,906 - ------------------------- Long-term debt: Related party................................. 1,918,080 2,262,005 Other......................................... 5,531,653 4,166,881 Deferred gain on sale and leaseback............. - 101,893 Other long-term liabilities..................... 473,866 504,776 SHAREHOLDERS' EQUITY Common stock, par value $.01.................... 28,027 28,027 Capital in excess of par value.................. 9,394,163 9,423,089 Retained earnings (deficit)..................... 97,628 (283,611) ------------ ----------- 9,519,818 9,167,505 Less Treasury stock 25,400 shares, at cost...... - (82,901) Foreign currency translation adjustment......... 7,379 (116,449) ------------ ----------- TOTAL SHAREHOLDERS' EQUITY 9,527,197 8,968,155 - -------------------------- ------------ ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...... $ 31,006,078 $28,084,616 - ------------------------------------------ ============ =========== See Notes to (Condensed) Consolidated Financial Statements. 4 VICON INDUSTRIES, INC. AND SUBSIDIARIES (CONDENSED) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended 3/31/97 3/31/96 Cash flows from operating activities: Net income..................................... $ 381,239 $ 227,108 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization................ 398,315 335,947 Amortization of sale and leaseback........... (433,993) (166,050) Unrealized foreign exchange gain............. (33,623) (19,384) Change in assets and liabilities: Accounts receivable.......................... (578,417) (585,249) Other receivables............................ (28,206) 13,086 Inventories.................................. (1,586,331) (1,538,560) Prepaid expenses............................ (8,813) (33,460) Other assets................................. (211,956) (93,895) Accounts payable............................ 906,467 1,304,196 Accrued wages and expenses................... 510,530 (346,606) Income taxes payable......................... 54,844 50,711 Other liabilities........................... (30,909) (16,517) --------- --------- Net cash used in operating activities..... (660,853) (868,673) --------- --------- Cash flows from investing activities: Capital expenditures, net of minor disposals........................... (631,447) (249,979) --------- ---------- Net cash used in investing activities.... (631,447) (249,979) --------- ---------- Cash flows from financing activities: Net borrowings under new credit and security agreement......................... 1,388,755 3,011,904 Repayments of U.S. revolving credit agreement.................................. - (2,800,000) Repayment of promissory note to related party (200,000) - Increase (decrease) in borrowings under U.K. revolving credit agreement................. 290,400 (102,516) Repayments of other debt..................... (178,259) (203,965) ---------- ---------- Net cash provided by (used in) financing activities...................... 1,300,896 (94,577) ---------- ---------- Effect of exchange rate changes on cash.......... 56,906 85,048 ---------- ---------- Net increase (decrease) in cash.................. 65,502 (1,128,181) Cash at beginning of year........................ 205,876 1,151,850 ---------- ---------- Cash at end of period............................ $ 271,378 $ 23,669 =========== ========== See Notes to (Condensed) Consolidated Financial Statements. 5 VICON INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO (CONDENSED) CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1997 Note 1: Basis of Presentation The accompanying unaudited (condensed) consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended September 30, 1996. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations Three Months Ended March 31, 1997 Compared with March 31, 1996 Net sales for the quarter ended March 31, 1997 were $12.3 million compared with $10.9 million in the corresponding quarter last year. The increase was due principally to incremental sales of several newly introduced engineered systems products. The backlog of orders increased $.4 million during the quarter to $4.8 million at March 31, 1997. Gross profit margins for the quarter increased to 27.5% compared with 25.3% in the corresponding quarter one year ago. The margin increase was due principally to increased sales of higher margin products, particularly new proprietary digital video products. Operating expenses for the current quarter increased to $2.9 million compared with $2.4 million in the corresponding quarter last year. The increase was due to higher sales and promotion related expenses. Also during the quarter, $225,000 of moving expenses were incurred to relocate all U.S. operations to a new facility. Interest expense increased by approximately $76,000 to $261,000 during the current year quarter principally as a result of increased bank borrowings to support working capital growth. The increase in pretax income of approximately $57,000 was principally due to higher sales and gross margins, offset in part by increased operating expenses. Results of Operations Six Months Ended March 31, 1997 Compared with March 31, 1996 Net sales for the six months ended March 31, 1997 were $23.6 million compared with $21.4 million in the corresponding period last fiscal year. The increase was due principally to incremental sales of new digital video products and related intelligent peripheral devices. Gross profit margins for the six months ended March 31, 1997 were 27.8% compared with 25.5% in the corresponding period last year. The margin improvement was due to increased sales of higher margin products, particularly new proprietary digital video products. Operating expenses for the six months ended March 31, 1997 increased to $5.6 million compared with $4.8 million in the corresponding period last year. The increase was due to higher sales and promotion related expenses. The Company also incurred $225,000 of relocation expenses as noted above. Interest expense increased by $105,000 to $525,000 as the level of bank borrowings increased to support working capital growth. During the current period, the Company recorded an unrealized foreign exchange gain of $34,000 compared with a $19,000 gain in the corresponding period last year. These gains result from the revaluation of a yen denominated mortgage obligation into U.S. dollars. The increase in pretax income of $159,000 was due to higher sales and gross margins, offset in part by increased operating expenses. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS LIQUIDITY AND FINANCIAL CONDITION March 31, 1997 Compared with September 30, 1996 Working capital increased $.9 million to $13.0 million at March 31, 1997. The increase was principally a result of increased long term bank borrowings used to finance higher inventory levels. Accounts receivable increased $.6 million to $9.3 million at March 31, 1997, due to higher sales levels. Inventories increased $1.7 million to $16.4 million at March 31, 1997 as a result of increased levels of parts and work-in-process related to production of a new dome camera product line. Total accounts payable increased $.9 million to approximately $10.2 million at March 31, 1997 in order to finance the higher inventory levels. The Company maintains an overdraft facility and term mortgage loan of 1.1 million pounds sterling (approx. $1.8 million) in the U.K. to support working capital requirements. At March 31, 1997, approximately $1,293,000 was borrowed against these facilities. In February 1997, the Company's bank loan agreement was amended to increase maximum borrowings from $5.5 million to $6.5 million, subject to an availability formula based on accounts receivable and inventories. Further, the term of the agreement was extended to January 31, 1999. Borrowings under such agreement amounted to approximately $5.5 million at March 31, 1997 compared with $4.1 million at September 30, 1996. The increase was used principally to finance higher inventory levels and capital additions. Concurrent with the foregoing amendment, a $2,000,000 secured promissory note with Chugai Boyeki Co., Ltd., a related party, was modified to require installments of $200,000 upon execution, $360,000 in July 1998 and the balance of $1,440,000 upon maturity in July 1999. The Company believes that its bank loan agreements and other sources of credit provide adequate funding to meet its near term cash requirements. 8 PART II ITEM 1 - LEGAL PROCEEDINGS The Company has no material outstanding litigation. ITEM 2 - CHANGES IN SECURITIES None ITEM 3 - DEFAULTS UPON SENIOR SECURITIES None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's annual meeting was held on April 24, 1997. The following directors were elected at the meeting: Kenneth M. Darby Peter F. Neumann Kazuyoshi Sudo The terms of the following directors continued after the meeting: Peter F. Barry Milton F. Gidge Donald N. Horn Michael D. Katz W. Gregory Robertson Arthur D. Roche Arthur V. Wallace The matters voted upon at the meeting and the results of each vote are as follows: Nominees Withhold For Directors: For Authority Mr. Darby 2,656,137 15,714 Mr. Neumann 2,352,730 319,121 Mr. Sudo 2,656,012 15,839 Approval of the 1996 Incentive Stock Option Plan, covering 200,000 shares of Common Stock 1,852,848 819,003 Approval of the 1996 Non-Qualified Stock Option Plan for Outside Directors, covering 50,000 shares of Common Stock 1,538,197 1,133,654 Ratification of Auditors 2,650,321 21,530 9 ITEM 5 - OTHER INFORMATION None ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K No Form 8-K was required to be filed during the current quarter. Exhibit Numbers Description 10 Material Contracts (.1) Credit and Security Agreement between the Registrant and IBJ Schroder Bank and Trust Company, Second Amendment dated February 5, 1997. 10 Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. May 13, 1997 VICON INDUSTRIES, INC. Kenneth M. Darby Arthur D. Roche President Executive Vice President Chief Executive Officer Chief Financial Officer 11 Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. May 13, 1997 VICON INDUSTRIES, INC. VICON INDUSTRIES, INC. Kenneth M. Darby Arthur D. Roche Kenneth M. Darby Arthur D. Roche President Executive Vice President Chief Executive Officer Chief Financial Officer 11 EX-10 2 SECOND AMENDMENT AGREEMENT SECOND AMENDMENT AGREEMENT among VICON INDUSTRIES, INC. and IBJ SCHRODER BANK & TRUST COMPANY Amending the Credit Agreement among VICON INDUSTRIES, INC and IBJ SCHRODER BANK & TRUST COMPANY, dated as of December 27, 1995, as amended by the First Amendment Agreement, dated as of August 19, 1996 Dated as of February 5, 1997 THIS SECOND AMENDMENT AGREEMENT dated as of February 5,1997 (this "Amendment") among VICON INDUSTRIES, INC., a New York corporation (the "Borrower") and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation (the "Bank"), W I T N E S S E T H: WHEREAS, the Borrower and the Bank have entered into a Credit Agreement dated as of December 27, 1995, as amended by that First Amendment Agreement, dated as of August 19, 1996 (collectively, the "Agreement"; the terms defined in the Agreement are used in this Amendment as in the Agreement unless otherwise defined in this Amendment); and WHEREAS, the Borrower desires, and the Bank is willing on the terms and conditions set forth below, to modify certain terms of the Agreement in order to, among other things, increase the Commitment; NOW, THEREFORE, in consideration of the mutual premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Bank have agreed to amend the Agreement as hereinafter set forth: SECTION 1. Amendment to Agreement. The Agreement is, subject to the satisfaction of the conditi9ns to effectiveness set forth in Section 2 hereof, hereby amended as follows: (a) The definitions of "Applicable Margin," "Commitment" and "Formula Amount" 1.01 (Defined Terms) of the Agreement are amended to read in their entirety as follows: "'Applicable Margin' shall mean, with respect to any Loan, one percent (1.0%) per annum." "'Commitment' shall mean the Bank's commitment to make Loans prior to the Commitment Expiration Date up to the maximum aggregate principal amount equal to (i) prior to the Second Amendment Effective Date, $5,500,000 and (ii) on and after the Second Amendment Effective Date, $6,500,000 at any time outstanding, as referred to in Section 2.01(a)." "'Commitment Expiration Date" shall mean (i) prior to the Second Amendment Effective Date, December 31, 1997 and (ii) on and after the Second Amendment Effective Date, January 31, 1999." "'Formula Amount' shall mean, as at any date at which the same is to be determined, an amount equal to the sum of (a) 80 per cent of the amount of Eligible Accounts Receivable as at such date, plus (b) (i) prior to the Second Amendment Effective Date, 25 per cent and (ii) on and after the Second Amendment Effective Date, 30 per cent of the value of Eligible Inventory consisting of finished goods of the Borrower, provided, however, that the amount calculated pursuant to (b) shall not exceed $3,000,000; and minus such reserve as deemed necessary or appropriate by the Bank to reflect any contingencies, or the consequences of any breach or contravention of laws, including without limitation, Environmental Laws and laws related to OSHA, by the Borrower. The Bank may, in its sole discretion, at any time or times upon three Business Days' prior notice to the Borrower, increase or decrease the ratio of its advances against Eligible Accounts Receivable or Eligible Inventory, or both, and, in the event that any such ratio shall be decreased for any reason, such decrease shall become effective immediately for purposes of calculating the maximum amount of new Loans hereunder and the maximum amount of Loans which may be outstanding hereunder. The Borrower acknowledges that such changes in the ratio of advances against Eligible Accounts Receivable and Eligible Inventory may require the immediate prepayment of Loans by the Borrower." "Interest Coverage Ratio" shall mean, for any period for which the same is to be determined, the ratio of (a) earnings from continuing operations of the Borrower before interest, taxes, depreciation and amortization (excluding amortization of gain on sale and leaseback transactions) for such period, provided. however that the calculation of such earnings for the Period 1/1/97 - 3/31/97 shall exclude the amount of losses incurred with respect to moving expenses related to the Borrower's new corporate offices not to exceed [$175,000] (which represents losses) in the aggregate, to (b) the interest expense of the Borrower for such period net of all intercompany interest, determined in accordance with GAAP. (b) Section 1.01 (Defined Terms) of the Agreement is hereby amended by adding the following definitions in the proper alphabetical order: "'Second Amendment' shall mean the Second Amendment Agreement dated as of February 5, 1997 between the Borrower and the Bank." "'Second Amendment Effective Date' shall mean the date on which the conditions in Section 2 of the Second Amendment are satisfied or waived by the Bank." (c) Subsection (b) of Section 2.07 (Optional Prepayments of the Loans) is hereby amended to read in its entirety as follows: "(b) The Borrower may, upon at least ten Business Days' prior written notice to the Bank, elect to terminate or permanently reduce the Commitment not more than once during any Fiscal Quarter in an amount not less than $250,000 with such additional increments in integral multiples of $100,000; provided. however that (i) any reduction of the Commitment shall be accompanied by prepayment of Loans, together with accrued interest on the amount prepaid to the date of such prepayment, to the extent (if any) that the aggregate principal amount of the Loans then outstanding exceeds the amount of the Commitment as then reduced, (ii) any such termination of the Commitment shall be accompanied by prepayment in lull of all Loans then outstanding; together with accrued interest thereon to the date of such prepayment and any unpaid commitment fee then accrued under Section 2.11(b) hereof, and by payment of a fee ("Commitment Reduction Fee") equal to two per cent of the amount so reduced or terminated in the first twelve months following the date of execution and delivery of this Agreement, and equal to one-half of one percent of the amount so reduced or terminated for the period beginning December 27, 1996 through the Commitment Expiration Date." (d) Subsection (c) of Section 7.01 (Indebtedness) of the Agreement is hereby amended to read in its entirety as follows: "(c) Indebtedness of the Borrower which is unsecured (or secured by the Liens referred to in Section 7.02(c) and (d)) and incurred in the normal course of business in connection with installment purchases or Capitalized Leases of equipment or fixed assets, in an aggregate amount not exceeding $400,000 at any one time outstanding. (e) Schedule 7.08 (Issuances and Dispositions of Securities) is hereby amended by adding the information contained on Exhibit A hereto to the end thereof. (f) Subsection (A) of Section 9.03 (Net Income) of the Agreement is hereby amended by adding the following proviso to the end thereof: ",provided. however that the calculation of Net Income for the Period 1/1/97-3/31/97 shall exclude the amount of losses incurred with respect to moving expenses related to the Borrower's new corporate offices not to exceed [$175,000] (which represents losses) in the aggregate." (g) Section 9.05 (Maximum Capital Expenditures) of the Agreement is hereby amended in its entirety to read as follows" "During each Fiscal Year including, without limitation, Fiscal Year 1998, Capital Expenditures shall not exceed $500,000 per Fiscal Year, provided, however, that during Fiscal Year 1997, Capital Expenditures shall not exceed $1,000,000." SECTION 2. Conditions to Effectiveness. This Amendment shall become effective only upon the satisfaction or waiver of all of the following conditions precedent: (a) The Borrower and the Bank shall have duly executed and delivered this Amendment (whether the same or different copies) and the Bank shall have received a copy of this Amendment signed by the Borrower; (b) The Borrower and the Subordinated Lenders shall have duly executed and delivered the First Amendment No. 1 and Consent to Subordination Agreement ("Subordination Agreement Amendment"), dated as of the date hereof (whether the same or different copies), substantially in the form attached hereto as Exhibit B and the Bank shall have received a copy or copies of such Subordination Agreement Amendment signed by the Borrower and the Subordinated Lenders; (c) The Borrower shall have duly executed and delivered the Second Amended and Restated Revolving Credit Note, dated as of the date hereof, substantially in the form attached hereto as Exhibit C; (d) The Bank shall have received the fees and expense reimbursements referred to in Section 5 hereof; and (e) The Bank shall have received such other documents, opinions, approvals or appraisals as the Bank may reasonably request. SECTION 3. Representations and Warranties. In order to induce the Bank to enter into this Amendment, the Borrower hereby represents and warrants to the Bank that (i) it has the lull power, capacity, right and legal authority to execute, deliver and perform its obligations under this Amendment and the other Related Documents to which it is a party, and the Borrower has taken all appropriate action necessary to authorize the execution and delivery of; and the performance of its obligations under this Amendment and the other Related Documents to which it is a party, (ii) this Amendment, the Agreement (as amended by this Amendment) and the other Related Documents constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium or similar laws affecting the rights of creditors generally, (iii) the representations and warranties contained in the Agreement and in each of the other Related Documents to which it is a party are true and correct on and as of the date hereof as though made on and as of such date, except for changes which have occurred and which were not prohibited by the terms of the Agreement, (iv) no Default or Event of Default has occurred and is continuing, or would result from the execution, delivery and performance by the Borrower of this Amendment, the Agreement (as amended by this Amendment) or any of the other Related Documents to which it is a party, and (v) the Borrower is not in default in the payment or performance of any of its obligations under any mortgage, indenture, security agreement, contract, undertaking or other agreement or instrument to which it is a party or which purports to be binding upon it or any of its properties or assets, which default would have a material adverse effect on the management, business, operations, properties, assets or condition (financial or otherwise) of the Borrower, (vi) the Borrower is in compliance with all applicable statutes, laws, rules, regulations, orders and judgments, the contravention or violation of which would have a material adverse effect on the management, business, operations, properties, assets or condition (financial or otherwise) of the Borrower, (vii) no material adverse change in the business or assets, or in the condition (financial or otherwise) of the Borrower, and (viii) no litigation or administrative proceeding of or before any court or governmental body or agency is now pending, nor, to the best knowledge of the Borrower upon reasonable inquiry, is any such litigation or proceeding now threatened against the Borrower or any of its properties, nor, to the best knowledge of the Borrower upon reasonable inquiry, is there a valid basis for the initiation of any such litigation or proceeding, which if adversely determined (after giving effect to all applicable insurance coverage then in existence) would have a material adverse effect on the business, assets or condition (financial or otherwise) of the Borrower; SECTION 4. Reference to and Effect on the Documents. (A) Each reference in the Agreement to "this Agreement", '1hereunder", "hereof', "herein" or words of like import, and each reference to the Agreement in the Related Documents other than the Agreement, shall mean and be a reference to the Agreement as amended hereby. (B) Except as specifically amended hereby, the Agreement and all other Related Documents, and all other documents, agreements, instruments or writings entered into in connection therewith, shall remain in lull force and effect and are hereby ratified, confirmed and acknowledged by the Borrower. The amendments set forth above are limited precisely as written and shall not be deemed to (i) be a consent to any waiver or modification of any other term or condition of the Agreement or any document delivered pursuant thereto or (ii) prejudice any right or rights which the Bank may now or in the future have in connection with the Agreement or the other Related Documents. (C) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Bank under any of the Related Documents, nor constitute a waiver or modification of any provision of any of the Related Documents, nor a waiver of any now existing or hereafter arising Defaults of Events of Default. SECTION 5. Fees and Expenses. (A) The Borrower hereby agrees to pay, or cause to be paid to, the Bank a non-refundable amendment fee of$l0,000. (13) The Borrower hereby agrees to pay the Bank on demand for all costs, expenses, charges and taxes (other than any income taxes relating to income of the Bank), including, without limitation, all reasonable fees and disbursements of counsel, incurred by the Bank in connection with the preparation, negotiation, administration and enforcement of this Amendment and the other Related Documents to be delivered hereunder. SECTION 6. Governing Law. This Amendment and the rights and obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with the substantive laws of the State of New York, without regard for its conflict of laws principles. SECTION 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. SECTION 8. Successors. This Amendment shall be binding upon the successors, assigns, heirs, executors and administrators of the parties hereto. SECTION. 9. Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. VICON INDUSTRIES, INC. IBJ SCHRODER BANK & TRUST COMPANY By: Name: Title: EX-27 3
5 3-MOS 6-MOS SEP-30-1997 SEP-30-1997 MAR-31-1997 MAR-31-1997 271,378 271,378 0 0 10,456,850 10,456,850 (526,311) (526,311) 16,361,627 16,361,627 26,563,544 26,563,544 15,309,785 15,309,785 (10,867,251) (10,867,251) 31,006,078 31,006,078 13,555,282 13,555,282 7,923,599 7,923,599 0 0 0 0 28,027 28,027 9,499,170 9,499,170 31,006,078 31,006,078 12,327,871 23,625,645 0 0 8,935,576 17,052,542 0 0 2,859,359 5,501,931 65,000 110,000 260,985 524,933 206,951 436,239 41,000 55,000 165,951 381,239 0 0 0 0 0 0 165,951 381,239 .06 .13 .06 .13
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