10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD From              to             

Commission file number 001-11703

GENCOR INDUSTRIES, INC.

Delaware	59-0933147
(State or other jurisdiction of incorporated or organization)	(I.R.S. Employer Identification No.)

5201 North Orange Blossom Trail, Orlando, Florida	32810
(Address of principal executive offices)	(Zip Code)

(407) 290-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated Filer	x
Non-accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at August 10, 2009
Common stock, $.10 par value	8,079,872 shares
Class B stock, $.10 par value	1,532,998 shares

GENCOR INDUSTRIES, INC.

Index			Page
Part I. Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets – June 30, 2009 (Unaudited) and September 30, 2008	3
		Unaudited Condensed Consolidated Statements of Operations – Three-months and Nine-months ended June 30, 2009 and 2008	4
		Unaudited Condensed Consolidated Statements of Cash Flows – Nine-months ended June 30, 2009 and 2008	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
	Item 4.	Controls and Procedures	13
Part II. Other Information
	Item 6.	Exhibits	14
Signatures			15

Introductory Note: Caution Concerning Forward-Looking Statements

This Report and our other communications and statements may contain “forward-looking statements,” including statements about our beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. For information concerning these factors and related matters, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Report, and the following sections of our Annual Report on Form 10-K for the year ended September 30, 2008: (a) “Risk Factors” in Part I, Item 1A and (b) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. However, other factors besides those referenced could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us herein speak as of the date of this Report. We do not undertake to update any forward-looking statement, except as required by law.

Unless the context otherwise indicates, all references in this report to the “Company,” “Gencor,” “we,” “us,” or “our,” or similar words are to Gencor Industries, Inc. and its subsidiaries.

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GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

	June 30, 2009		September 30, 2008
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,821	$	4,068
Marketable securities at Fair value (Cost $52,000 at June 30, 2009 and $46,000 at September 30, 2008)		58,687		53,976
Accounts receivable, less allowance for doubtful accounts of $1,671 ($1,927 at September 30, 2008)		4,577		7,527
Inventories, net		28,459		35,044
Prepaid expenses		979		1,007
Total current assets		96,523		101,622
Property and equipment, net		8,499		8,817
Other assets		662		184
Total assets	$	105,684	$	110,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,340	$	4,442
Customer deposits		728		1,712
Income and other taxes payable		2,304		1,678
Accrued expenses		2,588		3,501
Total current liabilities		7,960		11,333
Long-term debt		—		—
Deferred income taxes		276		275
Total liabilities		8,236		11,608
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $.10 per share; authorized 300,000 shares; none issued	$	—	$	—
Common stock, par value $.10 per share; 15,000,000 shares authorized; 8,079,872 shares issued and outstanding at June 30, 2009 and September 30, 2008		808		808
Class B stock, par value $.10 per share; 6,000,000 shares authorized; 1,532,998 shares issued and outstanding at June 30, 2009 and September 30, 2008		153		153
Capital in excess of par value		10,542		10,542
Retained earnings		85,945		87,383
Accumulated other comprehensive income (loss)		—		129
Total stockholders’ equity		97,448		99,015
Total Liabilities and Shareholders’ Equity	$	105,684	$	110,623

See accompanying notes to condensed consolidated financial statements.

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GENCOR INDUSTRIES, INC.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three-Months Ended June 30						Nine-Months Ended June 30,
	2009			2008			2009			2008
Net Revenue	$	11,674		$	23,907		$	46,350		$	66,812
Cost and expense:
Production costs		9,724			19,102			37,205			50,700
Product engineering and development		538			785			1,747			2,037
Selling, general and administrative		2,024			3,114			7,635			8,438
		12,286			23,001			46,587			61,175
		(612	)		906			(237	)		5,637
Other income (expense):
Interest income		9			45			32			120
Interest expense		(18	)		(11	)		(50	)		(17	)
Income from investees		—			—			48			15,625
Change in fair value of marketable securities		174			(2	)		(1,288	)		(867	)
Loss on Sale of UK operations		(447	)		—			(447	)		—
Miscellaneous		(7	)		13			(39	)		3,463
		(289	)		45			(1,745	)		18,324
Income (loss) before income taxes		(901	)		951			(1,982	)		23,961
Income taxes		(173	)		268			(581	)		8,848
Net Income (loss)	$	(728	)		683		$	(1,400	)		15,113
Basic and diluted earnings (loss) per common share:
Basic earnings (loss) per share	$	(0.08	)	$	0.07		$	(0.15	)	$	1.57
Diluted earnings (loss) per share	$	(0.08	)	$	0.07		$	(0.15	)	$	1.57

See accompanying notes to condensed consolidated financial statements.

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GENCOR INDUSTRIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

In Thousands

	Nine-Months Ended June 30,
	2009			2008
Cash flows from operations:
Net income (loss)	$	(1,400	)	$	15,113
Adjustments to reconcile net income (loss) to cash provided (used) by operations:
Purchase of Marketable securities		(6,000	)		(7,000	)
Decrease (Increase) in fair value of Marketable securities		1,288			867
Deferred income taxes		—			(6,318	)
Depreciation and amortization		680			846
Loss on sale of UK operations		(447	)		—
Income from investees		(48	)		(15,625	)
Provision for allowance for doubtful accounts		350			320
Change in assets and liabilities:
Accounts receivable		2,600			(1,632	)
Inventories		6,585			4,306
Prepaid expenses		28			661
Customer deposits		(984	)		2,571
Income and other taxes payable		626			2,380
Accounts payable		(2,102	)		(250	)
Accrued expenses and other		(1,051	)		(3,439	)
Total adjustments		1,526			(22,313	)
Cash provided (used) by operations		126			(7,200	)
Cash flows from investing activities:
Stock options exercised		—			23
Distribution from unconsolidated investees		48			15,625
Proceeds from sale of UK operations		140			—
Capital expenditures		(393	)		(1,520	)
Cash from (used for) investing activities		(205	)		14,128
Effect of exchange rate changes on cash		(168	)		(35	)
Net increase (decrease) in cash		(247	)		6,893
Cash and cash equivalents at:
Beginning of period		4,068			3,707
End of period	$	3,821		$	10,600

See accompanying notes to condensed consolidated financial statements.

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GENCOR INDUSTRIES, INC.

Notes to Condensed Consolidated Financial Statements

All amounts in thousands, except per share amounts

Note 1 – Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending September 30, 2009.

The balance sheet at September 30, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Gencor Industries, Inc. Annual Report on Form 10-K for the year ended September 30, 2008.

Note 2 – Marketable Securities

Marketable securities are categorized as trading securities and stated at fair value. Fair value is determined using the quoted closing or latest bid prices. Realized gains and losses on investment transactions are determined by specific identification and are recognized as incurred in the statements of operations. Net unrealized gains and losses are reported in the statement of operations and represent the change in the fair value of investment holdings during the period. At June 30, 2009, marketable securities consisted of $51,715 in municipal bonds $5,441 in Cash equivalents, and $1,531 in equity stocks. At September 30, 2008, marketable securities consisted of $44,764 in municipal bonds and $9,212 in equity stocks.

Note 3 – Fair Value Measurements

The fair value of financial instruments is presented based upon a hierarchy of levels that prioritizes the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

If available, quoted market prices are used to value investments. Municipal bonds are valued at the closing price reported by the most active market on which the individual securities are traded (Level 1).

The following tables set forth, by level, within the fair value hierarchy, the Company’s assets measured at fair value as of June 30, 2009:

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Equities	$	1,531	$	—	$	—	$	1,531
Municipal Bonds	$	51,715	$	—	$	—	$	51,715
Cash Equivalents	$	5,441	$	—	$	—	$	5,441
	$	58,687	$	—	$	—	$	58,687

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Note 4 – Inventories

The components of inventory consist of the following:

	June 30, 2009		September 30, 2008
Raw materials	$	15,675	$	18,943
Work in process		3,148		7,387
Finished goods		8,611		7,594
Used equipment		1,025		1,120
	$	28,459	$	35,044

Note 5 – Earnings (Loss) Per Share Data

The following table sets forth the computation of basic and diluted earnings (Loss) per share for the periods indicated.

	Three-Months Ended June 30, 2009					Nine-Months Ended June 30, 2009
	2009			2008		2009			2008
Net income (Loss)	$	(728	)	$	683	$	(1,400	)	$	15,113
Denominator (shares in thousands):
Weighted average shares outstanding		9,613			9,612		9,613			9,611
Effect of dilutive stock options		—			14		—			8
Denominator for diluted EPS computation		9,613			9,626		9,613			9,619
Per common share:
Basic:
Net income (Loss)	$	(0.08	)	$	0.07	$	(0.15	)	$	1.57
Diluted:
Net income (Loss)	$	(0.08	)	$	0.07	$	(0.15	)	$	1.57

Note 6 – Comprehensive Income (Loss)

The total comprehensive income (loss) for the three-months and nine-months ended June 30, 2009 was ($570) and ($1,529), respectively. Total comprehensive income for the three-months and nine-months ended June 30, 2008 were $737, and $15,148, respectively. Total comprehensive income differs from net income due to gains and losses resulting from foreign currency translation, which are reflected separately in the shareholders’ equity section of the balance sheet under the caption “Accumulated other comprehensive income (Loss).” Gains and losses resulting from foreign currency transactions are included in income.

Note 7 – Income From Investees

The Company owned a 45% interest in Carbontronics LLC and a 25% interest in Carbontronics Fuels LLC and Carbontronics II, LLC. These interests were earned as part of value of risk on contracts to build four synthetic fuel production plants during 1998. The Company has no basis in these equity investments or requirement to provide future funding. The operations of Carbontronics LLC consisted of the receipt of contingent payments from the sales of the plants and the distribution thereof to its members. Carbontronics LLC had no other significant operations or assets. The operations of Carbontronics II, LLC consisted of the receipt of royalty payments from the plants and the distribution thereof to its members. Carbontronics II, LLC had no other significant operations or assets. Any income arising from these investments was dependent upon tax credits (adjusted for operating losses

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at the fuel plants) being generated as a result of synthetic fuel production, which is recorded as received. The Company received $48 in the quarter ended December 31, 2008, and did not receive distributions in the quarters ended March 31, 2009 or June 30, 2009. The Company received $15,625 in the quarter ended December 31, 2007, and did not receive distributions in the quarter ended June 30, 2008. These distributions are subject to state and Federal income taxes.

The synthetic fuel tax credit legislation expired at the end of calendar year 2007. Consequently, the four synthetic fuel plants were decommissioned. They were sold or transferred to site owners in exchange for a release of all contracted liabilities related to the removal of plants from the sites. The administrative partner has informed the Company that there were no operations in calendar 2008 and almost all of the partnership affairs are finalized. It is not possible to predict the amount, if any, of final distributions from the partnerships upon the final disposition and winding-up of operations.

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

Overview

Sales continued to weaken during our third fiscal quarter as the roadbuilding industry languishes under the current economic conditions. Although the much-ballyhooed “Stimulus” program announced by President Obama at the beginning of the year was to have placed billions of federal money with States which had highway projects engineered and “shovel ready”, precious little has actually happened. As of this point in time, very few unemployed construction workers have left the unemployment lines and donned the orange jackets of road construction workers.

Our backlog of proposals to prospective buyers of asphalt plants and major pieces of equipment is in excess of $200 million, but very little movement is occurring as contractors are waiting for the States to move forward with the projects, or for availability of bank financing. In the meantime, the nation’s roads continue to languish in need of repair or expansion. We remain optimistic that this is a temporary situation and hopeful that orders of our larger capital equipment will improve in fiscal 2010, although at this time, the magnitude of that improvement cannot be determined.

Fortunately, the reduction in sales of our larger equipment has resulted in part in an increase in sales of components, aftermarket parts, and ancillary services as many customers are choosing to maintain versus replace or upgrade their equipment.

In the short term, the current economic outlook leaves us with little confidence that there will be a marked improvement in the economy and the roadbuilding industry for the balance of 2009.

For the long term, we believe our strategy of continuing to invest heavily in Product Engineering and Development and our focus on delivering a high-quality product and superior service will strengthen our market position when demand for capital equipment rebounds. In response to our short-term outlook, we have already taken aggressive actions to conserve cash, right size our operations and cost structure, and will continue to do so based on our forecasts. These actions include adjustments to workforce and staffing, reduced purchases of raw materials and reductions in selling, general, and administrative expenses. We continue to review our internal processes to identify efficiencies and cost reductions and will continue scrutinizing our relationships with external suppliers to ensure we are achieving the highest-quality products and services at the most competitive cost.

We feel we are taking the appropriate actions to right size our cost structure which will prepare us for the future when the current deterrents to our market dissipate. Additionally, we will continue to strategically build inventory in key product lines so we will be best positioned to meet and exceed expectations of our customers in terms of delivery time when the economic environment improves and access to capital is restored.

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Overall, we expect our fourth fiscal quarter ending September 30, 2009 to remain challenging, but are optimistic that significant improvement, and return to normalcy will begin during the last quarter of this calendar year. In the meantime, we are managing our strong cash reserves, and investments prudently, and profitably, with view to growing the company organically, as well as by acquisition, if the opportunity arises.

Results of Operations

Net sales for the three months ended June 30, 2009 and 2008 were $11,674 and $23,907, respectively. Domestic sales during the three months ended June 30, 2009 and 2008 were $11,653 and $22,670, respectively, reflecting a decrease of $11,017. Domestic sales were lower than the prior year’s comparable quarter. We believe this was primarily due to the overall worsening of the economy and tightening of credit availability. Foreign sales decreased $1,127 in the three months ended June 30, 2009 compared to the three months ended June 30, 2008.

Net sales for the nine months ended June 30, 2009 and 2008 were $46,350 and $66,812, respectively. Domestic sales during the nine months ended June 30, 2009 and 2008 were $45,264 and $64,713, respectively, reflecting a decrease of $19,449. Domestic sales were lower than the comparable period in the prior year. We believe this was primarily due to the overall worsening of the economy and tightening of credit availability.

Gross profit percentage decreased from 20% in the three months ended June 30, 2008 to 17% in the three months ended June 30, 2009. Gross profit percentage decreased from 24% for the nine months ended June 30, 2008 to 20% in the nine-months ended June 30, 2009. Overall, the decreases in gross profit margin were due primarily to decreases in revenues with less than a proportionate decrease in our existing cost structure.

Our revenues are concentrated in the asphalt-related business and are subject to a seasonal slow-down during the third and fourth quarters of the calendar year. We cannot predict what impact the current recession will have on future earnings.

Selling, general, and administrative expense decreased $803 for the nine months ended June 30, 2009 compared to the nine months ended June 30, 2008. Selling and administrative expense decreased $1,090 for the three months ended June 30, 2009 compared to the three months ended June 30, 2008. These reductions were primarily the result of decreases in personnel, deferral or cancellation of discretionary expenses, and also decreases in commissions associated with decreases in revenue versus comparable periods.

We recognized income from investees (Carbontronics) of $48 in the nine-month period ended June 30, 2009. We recognized income from investees (Carbontronics) of $15,625 in the nine-month period ended June 30, 2008. We did not recognize income from investees (Carbontronics) in either of the three-month periods ended June 30, 2009 or 2008.

The operations of Carbontronics LLC consisted of the receipt of contingent payments from the sales from the plants and the distribution thereof to its members. Carbontronics LLC had no other significant operations or assets. The operations of Carbontronics II, LLC consisted of the receipt of royalty payments from the plants and the distribution thereof to its members. Carbontronics II, LLC had no other significant operations or assets. Any income arising from these investments was dependent upon tax credits (adjusted for operating losses at the fuel plants) being generated as a result of synthetic fuel production, which were recorded as received. These distributions were subject to state and Federal income taxes. Distributions from these entities depended upon the production of these operations qualifying for tax credits under Section 29 of the Internal Revenue Code and the ability to economically produce and market synthetic fuel produced by the plants.

The synthetic fuel tax credit legislation expired at the end of calendar year 2007. Consequently, the four synthetic fuel plants were decommissioned. The plants were sold or transferred to site owners in exchange for a release of all contracted liabilities related to the removal of plants from the sites. The administrative partner has informed us that there were no operations in calendar 2008 and almost all of the partnership affairs were finalized in 2008. It is not possible to predict the amount, if any, of final distributions from the partnerships upon the final disposition and winding-up of operations.

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For the three months ended June 30, 2009, and for the nine months ended June 30, 2009, the change in value of our marketable securities was a gain of $174, and a loss of $1,288, respectively. During the quarter ended June 30, 2009, we transferred $6,000 from our operating cash accounts to our investment portfolio. After this transfer, the cost basis in our investments portfolio grew from $46,000 to $52,000. For the three months ended June 30, 2008, and for the nine months ended June 30, 2008, the change in value of our marketable securities was a loss of $2, and $867, respectively. All of these decreases were the result of decreases in the market value of the securities held in the portfolio.

Included in other income for the nine months ended June 30, 2008 was the receipt of $4,100 in resolution of an outstanding claim against a former service provider less related legal costs of $700. The terms of the settlement are confidential and we do not expect any further collections or expenses related to this matter.

Income tax expense decreased by $441 and $9,429 as compared to the corresponding three month and nine month periods ended June 30, 2009, respectively. This is reflective of decreases in pre-tax income for the comparable periods of the prior fiscal year.

Liquidity and Capital Resources

We generate our capital resources primarily through operations. Over the past three years, we also received cash from distributions from investees (Carbontronics). However, we did not receive significant distributions from Carbontronics for the three-month reporting period ended June 30, 2009, nor do we expect to receive significant distributions from Carbontronics in subsequent periods.

We maintained a Revolving Credit and Security Agreement with PNC Bank, N.A. The Agreement established a three year revolving $20 million credit facility and was renewed through July 31, 2009. The facility provided for advances based on accounts receivable, inventory, and real estate. The facility included a $2 million limit on letters of credit. At June 30, 2009, we had $1.1 million of letters of credit outstanding. The interest rate at June 30, 2009, is at LIBOR plus 2.00% and subject to change based upon the Fixed Charge Coverage Ratio. We were required to maintain a Fixed Charge Coverage Ratio of 1.1:1. There were no required repayments as long as there were no defaults and there was adequate eligible collateral. Substantially all of our assets were pledged as security under the Agreement. We had no long term debt outstanding at June 30, 2009 or 2008. Prior to expiration of our credit facility with PNC Bank, we elected to amend this agreement as disclosed under the heading, “Contractual Obligations”, as set forth below in this Item 2.

As of June 30, 2009, we had $3.8 million in cash and cash equivalents, and $58.7 million in marketable securities. The marketable securities are invested through a professional investment advisor. The securities may be liquidated at any time into cash and cash equivalents.

Our backlog is at $2.6 million at June 30, 2009 versus $18.9 million at June 30, 2008. Orders have reduced significantly as a result of the recession and credit tightening in the second half of fiscal 2008 and first half of fiscal 2009. We are uncertain whether the decline in backlog was experienced by the industry as a whole.

In terms of working capital (defined as current assets less current liabilities), our balance of $89 million for the nine month period ended June 30, 2009, was in line with a working capital balance of $90 million at September 30, 2008.

Cash provided by Operations during the nine months ended June 30, 2009 was $126 thousand. This was driven in part by a reduction of revenue.

Cash utilized for Investing activities during the nine months period ended June 30, 2009 was $205 thousand and was primarily the result of capital expenditures. We historically operated a manufacturing facility and sales office in the United Kingdom. The revenues of the UK operations have been insignificant to our financial results. In June 2009, we sold our UK operations for $648 thousand dollars (not including transaction costs of $22 thousand dollars) and recognized a loss of $447 thousand dollars. We retained ownership of the building and land, the brand

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name (“General Combustion”), and the associated intellectual property (e.g., engineering drawings). Consequently, and going forward, we currently do not expect to have Market Risk associated with the UK operations.

In terms of Financing activities, there were no cash disbursements or receipts during the quarter ended June 30, 2009.

Seasonality

We are concentrated in the asphalt-related business and subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Traditionally, our customers do not purchase new equipment for shipment during the summer and fall months to avoid disrupting their peak season for highway construction and repair work. This slow-down often results in lower reported sales and earnings and/or losses during the first and fourth quarters of our fiscal year ended September 30.

Forward-Looking Information

This Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which represent our expectations and beliefs, including, but not limited to, statements concerning gross margins, sales of our products and future financing plans. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control. Actual results may differ materially depending on a variety of important factors, including the financial condition of our customers, changes in the economic and competitive environments and demand for our products.

For information concerning these factors and related matters, see the following sections of our Annual Report on Form 10-K for the year ended September 30, 2008: (a) “Risk Factors” in Part I, Item 1A and (b) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. However, other factors besides those referenced could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us herein speak as of the date of this Report. We do not undertake to update any forward-looking statement, except as required by law.

Critical Accounting Policies, Estimates and Assumptions

We believe the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Accounting policies, in addition to the critical accounting policies referenced below, are presented in Note 1 to our consolidated financial statement included in our Annual Report on Form 10-K for the year ended September 30, 2008, “Accounting Policies.”

SFAS No. 165, “Subsequent Events” (SFAS 165): In May 2009, the FASB issued SFAS 165, “Subsequent Events”. This pronouncement establishes general standards of accounting for and disclosure of events which occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS 165 provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions which occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures an entity should make regarding events or transactions which occurred after the balance sheet date. We adopted SFAS 165 during the third quarter of fiscal 2009, and its application had no impact on our condensed consolidated financial statements. We evaluated subsequent events through the date the accompanying financial statements were issued, August 10, 2009.

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Estimates and Assumptions

In preparing the consolidated financial statements, we use certain estimates and assumptions that may affect reported amounts and disclosures. Estimates and assumptions are used, among other places, when accounting for certain revenue (e.g. contract accounting), expense, and asset and liability valuations. We believe the estimates and assumptions made in preparing the consolidated financial statements are reasonable, but are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events may occur. We are subject to risks and uncertainties that may cause actual results to differ from estimated results.

Revenues

Revenues from contracts for the design and manufacture of certain custom equipment are recognized under the percentage-of-completion method. Revenues from all other sales are recorded as the products are shipped or service is performed.

The percentage-of-completion method of accounting for long term contracts recognizes revenue in proportion to actual labor costs incurred as compared with total estimated labor costs expected to be incurred during the entire contract. All selling, general and administrative expenses are charged to operations as incurred. Provision is made for any anticipated contract losses in the period that the loss becomes evident.

Investments

We mark to market all trading securities and record any unrealized gain or loss as income or loss in the current period.

Investment in Unconsolidated Investees

We owned a 45% interest in Carbontronics LLC and a 25% interest in Carbontronics Fuels LLC and Carbontronics II LLC. These interests were obtained as part of contracts to build four synthetic fuel production plants during 1998. We have no basis in these equity investments or requirement to provide future funding. Any income arising from these investments was dependent upon tax credits (adjusted for operating losses at the fuel plants) being generated as a result of synthetic fuel production, which were recorded as received. The synthetic fuel tax credit legislation expired at the end of calendar year 2007.

Contractual Obligations

We amended the Revolving Credit and Security Agreement with PNC Bank, N.A., on July 23, 2009. The original agreement was set to expire on July 31, 2009, and rather than let it expire, we elected to amend this agreement and reduce the amount of the credit facility from $20 million to $1.5 million. The facility also includes a $1.285 million limit on letters of credit, which is reduced from our original $2 million limit. We elected to reduce our credit facility at this time because we believe the higher amount associated with the original line was not needed. We are currently evaluating other options for a revolving credit facility.

Pursuant to the Third Amendment to the Revolving Credit and Security Agreement with PNC Bank, N.A., our credit facility shall continue until April 30, 2010, unless terminated sooner. We secured this revolving credit facility with a pledge of $2 million of assets from our investment portfolio by opening a separate bank account with PNC Bank, N.A. This pledge is governed by the Pledge Agreement with PNC Bank, N.A., dated July 23, 2009. In connection with the Third Amendment to the Revolving Credit and Security Agreement with PNC Bank, N.A., all representations, warranties, covenants, rights, duties and obligations set forth in the original agreement continue to apply, except as modified.

Off-Balance Sheet Arrangements

None

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company historically operated a manufacturing facility and sales office in the United Kingdom. The revenues of the UK operations have been insignificant to the Company’s financial results. In June 2009, the Company sold its UK operations for $648 thousand dollars (not including transaction costs of $22 thousand dollars) and recognized a loss of $447 thousand dollars. Gencor retained ownership of the building and land, the brand name (“General Combustion”), and the associated intellectual property (e.g., engineering drawings). Consequently, and going forward, the Company currently does not expect to have Market Risk associated with the UK operations.

At June 30, 2009 and 2008, the Company had no debt outstanding. Under the Revolving Credit and Security Agreement, substantially all of the Company’s borrowings bore interest at variable rates based upon the prime rate or LIBOR.

The Company’s marketable securities are invested in stocks and bonds through a professional investment advisor. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of securities, it is possible that changes in these risk factors could have an adverse material impact on the Company’s results of operations or equity.

The Company’s sensitivity analysis for interest rate risk excludes accounts receivable, accounts payable and accrued liabilities because of the short-term maturity of such instruments. The analysis does not consider the effect on other variables such as changes in sales volumes or management’s actions with respect to levels of capital expenditures, future acquisitions or planned divestures, all of which could be significantly influenced by changes in interest rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

Because of inherent limitations, our disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of such disclosure controls and procedures are met and no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company has been detected.

Changes in Internal Control over Financial Reporting

Our management, including the Chief Executive Officer and Chief Financial Officer, has reviewed our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). There were no changes in our internal control over financial reporting during the quarter ended June 30, 2009 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 6. Exhibits

(a) Exhibits

10.2	Third Amendment to the Revolving Credit and Security Agreement between the Company and PNC Bank, N.A.
10.3	Pledge Agreement between the Company and PNC Bank, N.A.
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended
32	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U. S. C. Section 1350.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	GENCOR INDUSTRIES, INC.
August 10, 2009	By:	/s/ E.J. Elliott
		E.J. Elliott, Chairman and Chief Executive Officer
August 10, 2009	By:	/s/ Michael Al Mundy
		Michael Al Mundy, Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EX-10.2

THIRD AMENDMENT TO REVOLVING CREDIT

AND SECURITY AGREEMENT

THIS THIRD AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT is made as of the 23rd day of July, 2009, by, between and among GENCOR INDUSTRIES, INC., a corporation organized under the laws of the State of Delaware (“Gencor”), GENERAL COMBUSTION CORPORATION, a corporation organized under the laws of the State of Florida (“General Combustion”), EQUIPMENT SERVICES GROUP, INC., a corporation organized under the laws of the State of Florida (“Equipment Services”), BITUMA-STOR, INC., a corporation organized under the laws of the State of Iowa (“Bituma-Stor”), and BITUMA CORPORATION, a corporation organized under the laws of the State of Washington (“Bituma”; Bituma, Gencor, General Combustion, Equipment Services and Bituma-Stor each a “Borrower” and collectively “Borrowers”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for the Lenders (PNC, in such capacity, the “Agent”).

R E C I T A L S:

WHEREAS, Borrower and PNC, as Lender and as Agent entered into that certain Revolving Credit and Security Agreement dated August 1, 2003 (the “Original Credit Agreement”), as amended by that certain First Amendment to Revolving Credit and Security Agreement dated as of July 31, 2006 (the “First Amendment”) and as further amended by that certain Second Amendment to Revolving Credit and Security Agreement dated as of September 29, 2006 (the “Second Amendment”; the Second Amendment, the First Amendment and the Original Credit Agreement are collectively referred to herein as the “Credit Agreement” or the “Agreement”); and

WHEREAS, all capitalized terms used herein shall have the same meaning specified and defined in the Agreement except as modified herein; and

WHEREAS, Borrower and PNC desire to amend the Agreement in accordance with the terms and provisions set forth herein.

NOW, THEREFORE, in consideration of the sum of Ten and  ⁰⁰/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the loans or extensions of credit heretofore now or hereafter made or to be made for the benefit of Borrower by the Lenders, the parties do hereby agree that the Agreement is hereby amended as follows:

1. The parties acknowledge that the recitals set forth above are true and correct, and are hereby incorporated herein by reference.

2. The Credit Agreement is hereby amended as follows:

(a) Article I, Section 1.2, the definition of “Maximum Facility Amount” shall be amended to read as follows:

“Maximum Facility Amount” shall mean $1,500,000.00; provided, however, that the total amount of the Letters of Credit shall not exceed $1,285,000.00.

(b) Article XIII, Section 13.1 is hereby deleted in its entirety and the following is inserted in its place and stead:

13.1. Term. This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower and Lender, shall become effective on the date hereof and shall continue in full force and effect until April 30, 2010 (the “Term”) unless sooner terminated following the full repayment of all Obligations and the return of all original Letters of Credit to Lender. Upon the Obligations being paid in full such that Lender has no further obligations hereunder (including, without limitation, the obligation to make Revolving Advances or issue Letters of Credit), and provided further that all original Letters of Credit have been returned to Lender, Lender shall effect the release of its Liens and Lien Perfection Documents within thirty (30) days following the satisfaction of the Obligations and the return of the original Letters of Credit.

3. No further Revolving Advances shall be available under the Credit Agreement from and after the date of this Amendment. The Advance for closing costs pertaining to this Amendment and the existing Letters of Credit previously issued by Agent shall constitute the sole remaining unpaid Advances under the Credit Agreement from and after the date of this Amendment.

4. By its execution hereof, Borrowers do hereby reaffirm and confirm all pledges and security interests in the Collateral provided by Borrowers in favor of Agent under the Agreement and the Other Documents including, without limitation, the pledges and security interests provided by the following loan and security documents, each dated as of August 1, 2003 (collectively, the “Security Documents”):

(i) Rider to Security Agreement – Patents (Gencor) Recorded with the U.S. Patent and Trademark Office under Reel/Frame 014373/0144;

(ii) Rider to Security Agreement – Trademarks (Gencor) Recorded with the U.S. Patent and Trademark Office under Reel/Frame 002800/0338;

(iii) Rider to Security Agreement – Trademarks (General Combustion Corporation) Recorded with the U.S. Patent and Trademark Office under Reel/Frame 002801/0088;

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(iv) Hazardous Substance Certificate and Indemnification Agreement (Florida Property);

(v) Hazardous Substance Certificate and Indemnification Agreement (Iowa Property);

(vi) Americans With Disabilities Act Certificate and Indemnification Agreement (Florida Property);

(vii) Americans With Disabilities Act Certificate and Indemnification Agreement (Iowa Property);

(viii) Collateral Assignment of Rights Under Business Interruption Insurance Policy; and

(ix) Tax Indemnity Agreement.

Borrower hereby acknowledges that all references to the Agreement in the Security Documents shall now refer to the Agreement as amended by this Amendment thereto.

5. As a material inducement for PNC to execute this Amendment, each Borrower does hereby release, waive, discharge, covenant not to sue, acquit, satisfy and forever discharge PNC, its officers, directors, employees and agents and its affiliates and assigns from any and all liability, claims, counterclaims, defenses, actions, causes of action, suits, controversies, agreements, promises and demands whatsoever in law or in equity which such Borrower ever had, now has, or which any personal representative, successor, heir or assign of such Borrower hereafter can, shall or may have against PNC, its officers, directors, employees, and agents, and its affiliates and assigns, for, upon or by reason of any matter, cause or thing whatsoever through the date hereof. Each Borrower further expressly covenants with and warrants unto PNC and its affiliates and assigns, that there exist no claims, counterclaims, defenses, objections, offsets or claims of offset against PNC, or the obligation of such Borrower to pay PNC under the Notes, the Agreement and the Other Documents and to pay the Obligations to Lenders when and as the same become due and payable.

6. Each Borrower acknowledges and reaffirms that all warranties, representations, affirmative covenants and negative covenants set forth in the Credit Agreement remain in full force and effect on the date hereof as if made on the date hereof.

7. This Amendment amends the Credit Agreement, and each Borrower acknowledges and agrees that the security interests, rights, duties, and obligations of such Borrower and the Lenders created by the Credit Agreement are not extinguished, but are reaffirmed and remain in full force and effect as provided in the Credit Agreement, as modified herein. In the event of any conflict between the terms and provisions of the Credit Agreement and the terms and provisions of this Amendment, the terms and provisions of this Amendment shall control and prevail.

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THE PARTIES DO HEREBY KNOWINGLY, MUTUALLY, VOLUNTARILY, INTENTIONALLY AND WILLINGLY WAIVE THEIR RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS MADE AMONG THEM, WHETHER NOW EXISTING OR ARISING IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY AND ALL CLAIMS, DEFENSES, COUNTERCLAIMS, CROSS-CLAIMS, THIRD PARTY CLAIMS AND INTERVENER’S CLAIMS, WHETHER ARISING FROM OR RELATED TO THE NEGOTIATION EXECUTION AND PERFORMANCE OF THE TRANSACTIONS TO WHICH THE AGREEMENT, THE OTHER DOCUMENTS AND THIS AMENDMENT RELATES.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date and year first set forth above.

Signed, sealed and delivered in the presence of:		GENCOR INDUSTRIES, INC., a Delaware corporation
/s/ Michael Al Mundy
Print name:	Michael Al Mundy	By:	/s/ E.J. Elliott
		Title:	Chairman and Chief Executive Officer
Print name:			(Corporate Seal)
		GENERAL COMBUSTION CORPORATION, a Florida corporation
/s/ Michael Al Mundy
Print name:	Michael Al Mundy	By:	/s/ E.J. Elliott
		Title:	Chairman and Chief Executive Officer
Print name:			(Corporate Seal)

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/s/ Michael Al Mundy		EQUIPMENT SERVICES GROUP, INC., a
Print name:	Michael Al Mundy	Florida corporation
Print name:		By:	/s/ E.J. Elliott
		Title:	Chairman and Chief Executive Officer
			(Corporate Seal)
/s/ Michael Al Mundy
Print name:	Michael Al Mundy	BITUMA-STOR, INC., an Iowa corporation
Print name:		By:	/s/ E.J. Elliott
		Title:	Chairman and Chief Executive Officer
			(Corporate Seal)
/s/ Michael Al Mundy		BITUMA CORPORATION, a Washington
Print name:	Michael Al Mundy	corporation
Print name:		By:	/s/ E.J. Elliott
		Title:	Chairman and Chief Executive Officer
			(Corporate Seal)
/s/ Michael Al Mundy		PNC BANK, NATIONAL ASSOCIATION,
Print name:	Michael Al Mundy	as Lender and as Agent
		By:	/s/ Raymond Kupiec
Print name:			Raymond Kupiec, Vice President

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EX-10.3

Pledge Agreement (Bank Deposits)

THIS PLEDGE AGREEMENT, dated as of this 23rd day of July, 2009, is made by GENCOR INDUSTRIES, INC., a Delaware corporation (the “Pledgor”), with an address at 5201 N. Orange Blossom Trail, Orlando, Florida 32810, in favor of PNC BANK, NATIONAL ASSOCIATION (the “Secured Party”), with an address at 300 South Orange Avenue, Suite 800, Orlando, Florida 32801.

1. Pledge. In order to induce the Secured Party to extend the Obligations (as defined below), the Pledgor hereby grants a security interest in and pledges to the Secured Party, and to all other direct or indirect subsidiaries of The PNC Financial Services Group, Inc., all of the Pledgor’s right, title and interest in and to the accounts, deposits, deposit accounts, and certificates of deposit, whether negotiable or nonnegotiable, and all security entitlements of the Pledgor with respect thereto, whether now owned or hereafter acquired, including those entries on the records of the issuing institution, and any and all renewals, substitutions, replacements and proceeds thereof and all income, interest and other distributions thereon maintained in the name of the Pledgor by the issuing institution (collectively, the “Collateral”), as more fully described on Exhibit A attached hereto and made a part hereof.

The Pledgor agrees that (i) the Secured Party shall have the sole and exclusive right of withdrawal of the Collateral, (ii) the Pledgor shall have no right of withdrawal of the Collateral, and (iii) the Secured Party may make appropriate notations in its books and records (electronic or otherwise) to effectuate the foregoing.

2. Obligations Secured. The Collateral secures payment of the “Obligations” as defined in that certain Revolving Credit and Security Agreement dated as of August 1, 2003, by and among the Pledgor together with GENERAL COMBUSTION CORPORATION, a Florida corporation, EQUIPMENT SERVICES GROUP, INC., a Florida corporation, BITUMA-STOR, INC., an Iowa corporation, and BITUMA CORPORATION, a Washington corporation (collectively “Borrower”), and the Secured Party, as amended by First Amendment to Revolving Credit and Security Agreement dated as of July 31, 2006, as further amended by a Second Amendment to Revolving Credit and Security Agreement dated as of September 29, 2006, as further amended by a Third Amendment to Revolving Credit and Security Agreement dated as of even date herewith (collectively, the “Security Agreement”). All capitalized terms not otherwise defined in this Pledge Agreement shall have the same meanings ascribed to such terms in the Security Agreement.

3. Representations and Warranties. The Pledgor represents and warrants to the Secured Party that (a) no prior lien or encumbrance exists on the Collateral, and the Pledgor will not grant or suffer to exist any such lien or encumbrance in the future, other than in favor of the Secured Party, and (b) the Pledgor is the legal owner of the Collateral and has the right to pledge and grant a security interest in the Collateral without the consent of any other party other than the issuing institution, which the Pledgor has caused or will cause to execute the Acknowledgment in substantially the form attached hereto.

4. Default.

4.1. If any of the following occur (each an “Event of Default”): (i) any Event of Default (as defined in any of the Obligations), (ii) any default under any of the Obligations that does not have a defined set of “Events of Default” and the lapse of any notice or cure period provided in such Obligations with respect to such default, (iii) demand by the Secured Party under any of the Obligations that have a demand feature, (iv) the failure by the Pledgor to perform any of its obligations hereunder, (v) the falsity, inaccuracy or material breach by the Pledgor of any written warranty, representation or statement made or furnished to the Secured Party by or on behalf of the Pledgor, (vi) the failure of the Secured Party to have a perfected first priority security interest in the Collateral, (vii) any restriction is imposed on the pledge or transfer of any of the Collateral after the date of this

Agreement without the Secured Party’s prior written consent, or (viii) the breach of the Control Agreement (referred to in Section 6 below), or receipt of notice of termination of the Control Agreement if no successor custodian acceptable to the Secured Party has executed a Control Agreement in form and substance acceptable to the Secured Party on or before 10 days prior to the effective date of the termination, then the Secured Party is authorized in its discretion to declare any or all of the Obligations to be immediately due and payable without demand or notice, which are expressly waived, and may exercise any one or more of the rights and remedies granted pursuant to this Pledge Agreement or given to a secured party under the Uniform Commercial Code of the applicable state, as it may be amended from time to time, or otherwise at law or in equity, including without limitation the right to sell or otherwise dispose of any or all of the Collateral at public or private sale, with or without advertisement thereof, upon such terms and conditions as it may deem advisable and at such prices as it may deem best.

4.2. The Secured Party is authorized to draw the funds represented by the Collateral, in whole or in part, and to do all acts necessary to draw such funds, to apply to all Obligations secured hereby, whether declared immediately due and payable or otherwise, and the officers of the issuing institution are authorized and directed to pay the same to the Secured Party on demand.

4.3. The net proceeds arising from the disposition of the Collateral after deducting expenses incurred by the Secured Party will be applied to the Obligations in the order determined by the Secured Party. If any excess remains after the discharge of all of the Obligations, the same will be paid to the Pledgor. If after exhausting all of the Collateral there is a deficiency, the Pledgor or, if the Pledgor is not borrowing from the Secured Party or providing a guaranty of the Borrower’s Obligations, the Borrower will be liable therefor to the Secured Party; provided, however, that nothing contained herein will obligate the Secured Party to proceed against the Pledgor, the Borrower or any other party obligated under the Obligations or against any other collateral for the Obligations prior to proceeding against the Collateral.

4.4. If any demand is made at any time upon the Secured Party for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if the Secured Party repays all or any part of such amount by reason of any judgment, decree or order of any court or administrative body or by reason of any settlement or compromise of any such demand, the Pledgor will be and remain liable for the amounts so repaid or recovered to the same extent as if such amount had never been originally received by the Secured Party. The provisions of this section will be and remain effective notwithstanding the release of any of the Collateral by the Secured Party in reliance upon such payment (in which case the Pledgor’s liability will be limited to an amount equal to the fair market value of the Collateral determined as of the date such Collateral was released) and any such release will be without prejudice to the Secured Party’s rights hereunder and will be deemed to have been conditioned upon such payment having become final and irrevocable. This Section shall survive the termination of this Pledge Agreement.

5. Interest and Premiums. All interest and premiums declared or paid on the Collateral shall be the property of the Pledgor but shall remain as Collateral, subject to the restrictions contained in this Agreement, unless released by the Secured Party, in its discretion, following a request from Pledgor. At any time after the occurrence of an Event of Default, the Secured Party shall be entitled to apply all interest and premiums declared or paid on the Collateral in accordance with the provisions of Section 4 above.

6. Securities Account. The Pledgor agrees to cause the issuing financial institution or securities intermediary on whose books and records the ownership interest of the Pledgor in the Collateral appears (the “Custodian”) to execute and deliver, contemporaneously herewith, a control agreement or other agreement satisfactory to the Secured Party (the “Control Agreement”) in order to perfect and protect the Secured Party’s security interest in the Collateral.

7. Further Assurances. By its signature hereon, the Pledgor hereby irrevocably authorizes the Secured Party, at any time and from time to time, to execute (on behalf of the Pledgor), file and record against the Pledgor any notice, financing statement, continuation statement, amendment statement, instrument, document or

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agreement under the Uniform Commercial Code that the Secured Party may consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or to enable the Secured Party to exercise or enforce its rights hereunder with respect to such security interest. Without limiting the generality of the foregoing, the Pledgor hereby irrevocably appoints the Secured Party as the Pledgor’s attorney-in-fact to do all acts and things in the Pledgor’s name that the Secured Party may deem necessary or desirable. This power of attorney is coupled with an interest with full power of substitution and is irrevocable. The Pledgor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.

8. Notices. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing and will be effective upon receipt. Notices may be given in any manner to which the parties may separately agree, including electronic mail. Without limiting the foregoing, first-class mail, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices. Regardless of the manner in which provided, Notices may be sent to a party’s address as set forth above or to such other address as either the Pledgor or the Secured Party may give to the other for such purpose in accordance with this section.

9. Preservation of Rights. (a) No delay or omission on the Secured Party’s part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Secured Party’s action or inaction impair any such right or power. The Secured Party’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Secured Party may have under other agreements, at law or in equity.

(b) The Secured Party may, at any time and from time to time, without notice to or the consent of the Pledgor unless otherwise expressly required pursuant to the terms of the Obligations, and without impairing or releasing, discharging or modifying the Pledgor’s liabilities hereunder, (i) change the manner, place, time or terms of payment or performance of or interest rates on, or other terms relating to, any of the Obligations; (ii) renew, substitute, modify, amend or alter, or grant consents or waivers relating to any of the Obligations, any other pledge or security agreements, or any security for any Obligations; (iii) apply any and all payments by whomever paid or however realized including any proceeds of any collateral, to any Obligations of the Pledgor or the Borrower in such order, manner and amount as the Secured Party may determine in its sole discretion; (iv) deal with any other person with respect to any Obligations in such manner as the Secured Party deems appropriate in its sole discretion; (v) substitute, exchange or release any security or guaranty; or (vi) take such actions and exercise such remedies hereunder as provided herein. The Pledgor hereby waives (a) presentment, demand, protest, notice of dishonor and notice of non-payment and all other notices to which the Pledgor might otherwise be entitled, and (b) all defenses based on suretyship or impairment of collateral.

10. Illegality. In case any one or more of the provisions contained in this Pledge Agreement should be invalid, illegal or unenforceable in any respect, it shall not affect or impair the validity, legality and enforceability of the remaining provisions in this Pledge Agreement.

11. Changes in Writing. No modification, amendment or waiver of, or consent to any departure by the Pledgor from, any provision of this Pledge Agreement will be effective unless made in a writing signed by the Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Pledgor in any case will entitle the Pledgor to any other or further notice or demand in the same, similar or other circumstance.

12. Entire Agreement. This Pledge Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the Pledgor and the Secured Party with respect to the subject matter hereof.

13. Successors and Assigns. This Pledge Agreement will be binding upon and inure to the benefit of the Pledgor and the Secured Party and their respective heirs, executors, administrators, successors and assigns; provided, however, that the Pledgor may not assign this Pledge Agreement in whole or in part without the Secured Party’s prior written consent and the Secured Party at any time may assign this Pledge Agreement in whole or in part.

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14. Interpretation. In this Pledge Agreement, unless the Secured Party and the Pledgor otherwise agree in writing, the singular includes the plural and the plural the singular; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; the word “or” shall be deemed to include “and/or”, the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Pledge Agreement. Section headings in this Pledge Agreement are included for convenience of reference only and shall not constitute a part of this Pledge Agreement for any other purpose. If this Pledge Agreement is executed by more than one party as Pledgor, the obligations of such persons or entities will be joint and several.

15. Indemnity. The Pledgor agrees to indemnify each of the Secured Party, each legal entity, if any, who controls, is controlled by or is under common control with the Secured Party, and each of their respective directors, officers and employees (the “Indemnified Parties”), and to hold each Indemnified Party harmless from and against, any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation or preparation therefor) which any Indemnified Party may incur, or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Pledgor), in connection with or arising out of or relating to the matters referred to in this Pledge Agreement or under any Control Agreement, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Pledgor, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful misconduct. The indemnity agreement contained in this Section shall survive the termination of this Pledge Agreement. The Pledgor may participate at its expense in the defense of any such action or claim.

16. Governing Law and Jurisdiction. This Pledge Agreement has been delivered to and accepted by the Secured Party and will be deemed to be made in the State where the Secured Party’s office indicated above is located. THIS PLEDGE AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PLEDGOR AND THE SECURED PARTY DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE SECURED PARTY’S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. The Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where the Secured Party’s office indicated above is located; provided that nothing contained in this Pledge Agreement will prevent the Secured Party from bringing any action, enforcing any award or judgment or exercising any rights against the Pledgor individually, against any security or against any property of the Pledgor within any other county, state or other foreign or domestic jurisdiction. The Pledgor acknowledges and agrees that the venue provided above is the most convenient forum for both the Secured Party and the Pledgor. The Pledgor waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Pledge Agreement.

17. Authorization to Obtain Credit Reports. By signing below, each Pledgor who is an individual provides written authorization to the Secured Party or its designee (and any assignee or potential assignee hereof) to obtain the Pledgor’s personal credit profile from one or more national credit bureaus. Such authorization shall extend to obtaining a credit profile in considering this Pledge Agreement and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account.

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18. Right to Disburse From Account. Secured Party shall have the right to make disbursements from the Account described on Exhibit “A” to reimburse Secured Party for any draws made on the Letters of Credit by the beneficiaries thereof.

19. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY WAIVES ANY AND ALL RIGHT THE PLEDGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS PLEDGE AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

The Pledgor acknowledges that it has read and understood all the provisions of this Pledge Agreement, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

WITNESS the due execution hereof as a document under seal, as of the date first written above.

WITNESS / ATTEST:
		GENCOR INDUSTRIES, INC., a Delaware corporation
/s/ Michael Al Mundy
Print Name:	Michael Al Mundy
		By:	/s/ E.J. Elliott
		Print Name:	E.J. Elliott
Print Name:		Its:	Chairman and Chief Executive Officer
		(Corporate Seal)

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EXHIBIT A

TO PLEDGE AGREEMENT

Account No.                     in the name of Gencor Industries, Inc. Restricted Loan Account in the amount of $2,000,000.00 maintained with PNC Bank, National Association (the “Account”)

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Mr. E.J. Elliott, certify that:

1. I have reviewed this quarterly report on Form on 10-Q of Gencor Industries, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2009	/s/ E.J. Elliott
	E.J. Elliott
	Chairman and Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Mr. Michael Al Mundy, certify that:

1. I have reviewed this quarterly report on Form on 10-Q of Gencor Industries, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2009	/s/ Michael Al Mundy
	Michael Al Mundy
	Chief Financial Officer

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EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Gencor Industries, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ E.J. Elliott

E.J. Elliott

Chairman and Chief Executive Officer

August 10, 2009

/s/ Michael Al Mundy

Michael Al Mundy

Chief Financial Officer

August 10, 2009

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