##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

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



FOR THE PERIOD ENDED June 30, 2005



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 0-3821



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GENCOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|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)



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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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange

Act.)    Yes ̈No  x



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



|                              |  |                             
|----------------------------- |  | ----------------------------
|Class                         |  | Outstanding at July 15, 2005
|Common stock, $.10 par value  |  | 7,189,470 shares            
|Class B stock, $.10 par value |  | 1,642,998 shares            



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##### Table of Contents

GENCOR INDUSTRIES, INC.



Index



|                              |  |    |  |         |  |                                                                                                                  |  |     
|----------------------------- |  | -- |  | ------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |    |  |         |  |                                                                                                                  |  | Page
|Part I.
Financial Information |  |   
|                              |  |    |  |        
|                              |  |    |  | Item 1. |  | Financial Statements                                                                                             |  |     
|                              |  |    |  |        
|                              |  |    |  |         |  | Condensed consolidated balance sheets  June 30, 2005 (Unaudited) and September 30, 2004                         |  | 3   
|                              |  |    |  |        
|                              |  |    |  |         |  | Unaudited condensed consolidated statements of operations  Three  and Nine-months ended June 30, 2005 and 2004 |  | 4   
|                              |  |    |  |        
|                              |  |    |  |         |  | Unaudited condensed consolidated statements of cash flows  Nine-months ended June 30, 2005 and 2004             |  | 5   
|                              |  |    |  |        
|                              |  |    |  |         |  | Notes to unaudited condensed consolidated financial statements                                                   |  | 6   
|                              |  |    |  |        
|                              |  |    |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                            |  | 9   
|                              |  |    |  |        
|                              |  |    |  | Item 3. |  | Quantitative and Qualitative Disclosure of Market Risk                                                           |  | 11  
|                              |  |    |  |        
|                              |  |    |  | Item 4. |  | Controls and Procedures                                                                                          |  | 12  
|                              | 
|Part II.
Other Information    |  |   
|                              |  |    |  |        
|                              |  |    |  | Item 5. |  | Other Information                                                                                                |  | 13  
|                              |  |    |  |        
|                              |  |    |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                                 |  | 13  
|                              | 
|Signatures                    |  | 14



2



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##### Table of Contents

Part I. Financial Information



Item 1. Financial Statements



GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)



|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | ------ | - | ----------------- | - | ------ | -
|                                                                                                                                                                         |  | June 302005 |        |   | September 30,2004 |  
|                                                                                                                                                                         |  | (Unaudited) |        |   |                   |  
|ASSETS                                                                                                                                                                   |  |             |        |   |                   |  
|Current assets:                                                                                                                                                          |  |             |        |   |                   |   |        |  
|Cash and cash equivalents                                                                                                                                                |  | $           | 923    |   |                   | $ | 550    |  
|Marketable securities at market value (Cost $25,000)                                                                                                                     |  |             | 25,323 |   |                   |   |       |  
|Accounts receivable, less allowance for doubtful accounts of $959 ($1,214 at September 30, 2004)                                                                         |  |             | 3,648  |   |                   |   | 2,401  |  
|Other receivables                                                                                                                                                        |  |             | 170    |   |                   |   | 120    |  
|Inventories, net                                                                                                                                                         |  |             | 18,486 |   |                   |   | 16,944 |  
|Deferred income taxes                                                                                                                                                    |  |             | 602    |   |                   |   | 602    |  
|Prepaid expenses                                                                                                                                                         |  |             | 1,100  |   |                   |   | 1,578  |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Total current assets                                                                                                                                                     |  |             | 50,252 |   |                   |   | 22,195 |  
|Property and equipment, net                                                                                                                                              |  |             | 8,413  |   |                   |   | 11,317 |  
|Assets held for sale                                                                                                                                                     |  |             | 5,401  |   |                   |   | 5,449  |  
|Other assets                                                                                                                                                             |  |             | 552    |   |                   |   | 3,851  |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Total assets                                                                                                                                                             |  | $           | 64,618 |   |                   | $ | 42,812 |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                     |  |             |        |   |                   |   |        |  
|Current liabilities:                                                                                                                                                     |  |             |        |   |                   |   |        |  
|Accounts payable                                                                                                                                                         |  | $           | 3,776  |   |                   | $ | 3,477  |  
|Customer deposits                                                                                                                                                        |  |             | 455    |   |                   |   | 1,099  |  
|Income and other taxes payable                                                                                                                                           |  |             | 756    |   |                   |   | 4,372  |  
|Accrued expenses                                                                                                                                                         |  |             | 2,962  |   |                   |   | 9,489  |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Total current liabilities                                                                                                                                                |  |             | 7,949  |   |                   |   | 18,437 |  
|Long-term debt                                                                                                                                                           |  |             |       |   |                   |   | 5,701  |  
|Deferred income taxes                                                                                                                                                    |  |             | 10,501 |   |                   |   | 71     |  
|Other liabilities                                                                                                                                                        |  |             |       |   |                   |   | 3,309  |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Total liabilities                                                                                                                                                        |  |             | 18,450 |   |                   |   | 27,518 |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Commitments and contingencies                                                                                                                                            |  |             |        |   |                   |   |        |  
|Shareholders 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; 7,276,870 shares and 7,093,470 shares issued at June 30, 2005 and
September 30, 2004, respectively |  |             | 728    |   |                   |   | 709    |  
|Class B stock, par value $.10 per share; 6,000,000 shares authorized; 1,734,998 shares and 1,878,398 shares issued at June 30, 2005 and
September 30, 2004, respectively |  |             | 173    |   |                   |   | 188    |  
|Capital in excess of par value                                                                                                                                           |  |             | 11,765 |   |                   |   | 11,467 |  
|Retained earnings                                                                                                                                                        |  |             | 36,892 |   |                   |   | 10,747 |  
|Accumulated other comprehensive income (loss)                                                                                                                            |  |             | (1,591 | ) |                   |   | (6,018 | )
|Subscription receivable from officer                                                                                                                                     |  |             | (95    | ) |                   |   | (95    | )
|Common stock in treasury, 179,400 shares at cost                                                                                                                         |  |             | (1,704 | ) |                   |   | (1,704 | )
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|Total shareholders equity                                                                                                                                               |  |             | 46,168 |   |                   |   | 15,294 |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  
|                                                                                                                                                                         |  | $           | 64,618 |   |                   | $ | 42,812 |  
|                                                                                                                                                                         |  |             |        |   |                   |   |        |  



See notes to
condensed consolidated financial statements.



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##### Table of Contents

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, |  
|                                             |  | 2005                        |        |   | 2004                       |   |        | 2005 |  |   | 2004   |  
|Net revenue                                  |  | $                           | 14,846 |   |                            | $ | 12,407 |      |  | $ | 39,902 |   |  | $ | 42,816 |  
|                                             |  |                             |        |  
|Costs and expenses:                          |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Production costs                             |  |                             | 11,478 |   |                            |   | 8,573  |      |  |   | 30,162 |   |  |   | 29,764 |  
|Product engineering and development          |  |                             | 452    |   |                            |   | 454    |      |  |   | 1,465  |   |  |   | 1,411  |  
|Selling, general and administrative          |  |                             | 2,485  |   |                            |   | 2,419  |      |  |   | 6,964  |   |  |   | 7,490  |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             | 14,415 |   |                            |   | 11,446 |      |  |   | 38,591 |   |  |   | 38,665 |  
|                                             |  |                             |        |  
|Operating income                             |  |                             | 431    |   |                            |   | 961    |      |  |   | 1,311  |   |  |   | 4,151  |  
|                                             |  |                             |        |  
|Other income (expense):                      |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Interest income                              |  |                             | 25     |   |                            |   | 3      |      |  |   | 81     |   |  |   | 14     |  
|Interest expense                             |  |                             | (19    | ) |                            |   | (29    | )    |  |   | (142   | ) |  |   | (131   | )
|Income from Investees                        |  |                             | 6,964  |   |                            |   |       |      |  |   | 34,346 |   |  |   |       |  
|Increase in value of marketable securities   |  |                             | 446    |   |                            |   |       |      |  |   | 323    |   |  |   |       |  
|Miscellaneous                                |  |                             | 19     |   |                            |   | 11     |      |  |   | 56     |   |  |   | 129    |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             | 7,435  |   |                            |   | (15    | )    |  |   | 34,664 |   |  |   | 12     |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Income before income taxes                   |  |                             | 7,866  |   |                            |   | 946    |      |  |   | 35,975 |   |  |   | 4,163  |  
|                                             |  |                             |        |  
|Income taxes                                 |  |                             | 210    |   |                            |   | 302    |      |  |   | 9,830  |   |  |   | 1,530  |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Net income                                   |  | $                           | 7,656  |   |                            | $ | 644    |      |  | $ | 26,145 |   |  | $ | 2,633  |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted earnings per common share: |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Basic earnings per share                     |  | $                           | .87    |   |                            | $ | .07    |      |  | $ | 2.97   |   |  | $ | .30    |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Diluted earnings per share                   |  | $                           | .77    |   |                            | $ | .07    |      |  | $ | 2.73   |   |  | $ | .28    |  
|                                             |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  



See 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, |        
|                                                                           |  | 2005                       |         |   | 2004 |  
|Cash flows from operations:                                                |  |                            |         |   |      |   |        |  
|Net income                                                                 |  | $                          | 26,145  |   |      | $ | 2,633  |  
|Adjustments to reconcile net income to cash provided (used) by operations: |  |                            |         |   |      |   |        |  
|Marketable securities                                                      |  |                            | (25,323 | ) |      |   |       |  
|Deferred income taxes                                                      |  |                            | 10,430  |   |      |   | (2,300 | )
|Depreciation and amortization                                              |  |                            | 610     |   |      |   | 619    |  
|Income from investees                                                      |  |                            | (34,346 | ) |      |   |       |  
|Provision for allowance for doubtful accounts                              |  |                            | (255    | ) |      |   | 260    |  
|Change in assets and liabilities:                                          |  |                            |         |   |      |   |        |  
|Accounts receivable                                                        |  |                            | (992    | ) |      |   | (221   | )
|Other receivables                                                          |  |                            | (50     | ) |      |   | (190   | )
|Inventories                                                                |  |                            | (1,542  | ) |      |   | 1,104  |  
|Prepaid expenses                                                           |  |                            | 478     |   |      |   | 620    |  
|Other assets                                                               |  |                            |        |   |      |   | 27     |  
|Accounts payable                                                           |  |                            | 928     |   |      |   | 21     |  
|Customer deposits                                                          |  |                            | (644    | ) |      |   | 138    |  
|Income and other taxes payable                                             |  |                            | (2,262  | ) |      |   | 623    |  
|Accrued expenses                                                           |  |                            | (816    | ) |      |   | 1,029  |  
|                                                                           |  |                            |         |   |      |   |        |  
|Total adjustments                                                          |  |                            | (53,784 | ) |      |   | 1,730  |  
|                                                                           |  |                            |         |   |      |   |        |  
|Cash provided by (used for) operations                                     |  |                            | (27,639 | ) |      |   | 4,363  |  
|                                                                           |  |                            |         |   |      |   |        |  
|Cash flows from (used for) investing activities:                           |  |                            |         |   |      |   |        |  
|Stock options exercised                                                    |  |                            | 301     |   |      |   | 17     |  
|Distributions from unconsolidated investees                                |  |                            | 34,346  |   |      |   |       |  
|Capital expenditures                                                       |  |                            | (1,063  | ) |      |   | (348   | )
|Proceeds from assets held for sale                                         |  |                            | 48      |   |      |   |       |  
|                                                                           |  |                            |         |   |      |   |        |  
|Cash from (used for) investing activities                                  |  |                            | 33,632  |   |      |   | (331   | )
|                                                                           |  |                            |         |   |      |   |        |  
|Cash flows used for financing activities:                                  |  |                            |         |   |      |   |        |  
|Net repayment of debt                                                      |  |                            | (5,701  | ) |      |   | (4,515 | )
|                                                                           |  |                            |         |   |      |   |        |  
|Cash provided (used) for financing activities                              |  |                            | (5,701  | ) |      |   | (4,515 | )
|                                                                           |  |                            |         |   |      |   |        |  
|Effect of exchange rate changes on cash                                    |  |                            | 81      |   |      |   | 59     |  
|                                                                           |  |                            |         |   |      |   |        |  
|Net increase (decrease) in cash                                            |  |                            | 373     |   |      |   | (424   | )
|Cash and cash equivalents at:                                              |  |                            |         |   |      |   |        |  
|Beginning of period                                                        |  |                            | 550     |   |      |   | 734    |  
|                                                                           |  |                            |         |   |      |   |        |  
|End of period                                                              |  | $                          | 923     |   |      | $ | 310    |  
|                                                                           |  |                            |         |   |      |   |        |  



See notes to
condensed consolidated financial statements.



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GENCOR INDUSTRIES, INC.



Notes to
Unaudited 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- and nine-month periods ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending September 30, 2005.



The balance sheet at September 30, 2004 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, 2004.



Note 2  Marketable Securities



Marketable securities are categorized as trading securities and stated at
market value. Market 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 statements of operations and represent the change in the market value of investment holdings during the reporting period.



Note 3  Inventories



The components of inventory consist of the following:



|                |  |              |        |                   |   |       
|--------------- |  | ------------ | ------ | ----------------- | - | ------
|                |  | June 30,2005 |        | September 30,2004
|Raw materials   |  | $            | 7,640  |                   | $ | 7,294 
|Work in process |  |              | 5,037  |                   |   | 4,574 
|Finished goods  |  |              | 4,565  |                   |   | 4,083 
|Used equipment  |  |              | 1,244  |                   |   | 993   
|                |  |              |        |                   |   |       
|                |  | $            | 18,486 |                   | $ | 16,944
|                |  |              |        |                   |   |       



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Note 4  Earnings Per Share Data



The following table sets forth the computation of basic and diluted earnings per share:



|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|--------------------------------------- |  | --------------------------- | ----- | -------------------------- | - | ----- |  | ---- | ------ |  | - | -----
|                                        |  | Three Months Ended June 30, |       | Nine Months Ended June 30,
|(in thousands)                          |  | 2005                        |       | 2004                       |   | 2005  |  | 2004
|Net income                              |  | $                           | 7,656 |                            | $ | 644   |  | $    | 26,145 |  | $ | 2,633
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Denominator:                            |  |                             |       |                            |   |       |  |      |        |  |   |      
|Weighted average shares outstanding     |  | $                           | 8,832 |                            | $ | 8,684 |  | $    | 8,817  |  | $ | 8,683
|Effect of dilutive stock options        |  |                             | 1,089 |                            |   | 991   |  |      | 749    |  |   | 738  
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Denominator for diluted EPS computation |  | $                           | 9,921 |                            | $ | 9,675 |  | $    | 9,566  |  | $ | 9,421
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Per common share:                       |  |                             |       |                            |   |       |  |      |        |  |   |      
|                                        |  |                             |       |                           
|Basic:                                  |  |                             |       |                            |   |       |  |      |        |  |   |      
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Net income                              |  | $                           | 0.87  |                            | $ | 0.07  |  | $    | 2.97   |  | $ | 0.30 
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Diluted:                                |  |                             |       |                            |   |       |  |      |        |  |   |      
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      
|Net income                              |  | $                           | 0.77  |                            | $ | 0.07  |  | $    | 2.73   |  | $ | 0.28 
|                                        |  |                             |       |                            |   |       |  |      |        |  |   |      



Note 5  Comprehensive Income
(Loss)



Total comprehensive income for the three-and nine-months ended
June 30, 2005 was $7,623 and $26,226 respectively, which compares to the total comprehensive income for the three- and nine- months ended June 30, 2004 of $634 and $2,680, respectively. Total comprehensive income differs from net income due to
unrealized 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 loss. Realized gains
and losses resulting from foreign currency transactions are included in income.



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Note 6  Income From Investees



The Company owns 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 the 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. Any income arising from these
investments is dependent upon tax credits (adjusted for operating losses at the fuel plants) being generated as a result of synthetic fuel production, which will be recorded as received. The Company received no distributions in fiscal 2004, and did
receive distributions of $13,428 and $1,526, during 2003 and 2002 respectively.



In 2003, the Company was notified by its investee General Partner that the income tax returns for its synthetic fuel producing partnership were being audited. As previously reported, the Limited Partners may declare a Tax Event
and suspend further distributions indefinitely. The Company was informed that the Limited Partners had declared a Tax Event and therefore future distributions had ceased.



On January 5, 2005, the Company was informed that the IRS had concluded its examination of the investees with no material adverse findings.
As a result, distributions suspended since August of 2003 resumed and the Company received distributions of $6,964 and $34,346, respectively, for the three- and nine- months ended June 30, 2005. These distributions are subject to state and Federal
income taxes.



Future benefits from our synthetic fuel investments depend on
whether the production from these plants will continue to qualify for tax credits under Section 29 of the Internal Revenue Code; the ability to economically produce and market the synthetic fuel produced by these plants; future IRS reviews, and the
world price of crude oil (as per the provisions of Section 29 of the IRS Code, if the average price of crude oil reaches a certain level the tax credits will terminate). The recent escalation in oil prices raise serious doubt on the continued
availability of tax credits under Section 29 for the future. If oil prices remain at the current levels or increase, the tax credits could phase-out or terminate. The existing tax credit legislation is scheduled to expire at the end of the calendar
year 2007. Any one of the above eventualities may interrupt, reduce, or terminate further distributions.



Note 7  Discontinued Operations



On June 23, 2005, the assets of our discontinued operation in Brazil were disposed of with all proceeds used to pay liens and claims against the property. The net assets were fully reserved in 2001 when the other assets of the discontinued
operation were sold. Other Assets of $3.2 million, Property and Equipment of $3.5 million, Accounts Payable, Income and Other Taxes Payable and Accruals of $2.9 million, Other Liabilities of $3.3 million, and Accumulated Translation Loss of $4.3
million were charged to the impairment reserve with no resulting gain or loss on the disposition.



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



Results of Operations



Net sales for the quarters ended June 30, 2005 and 2004 were $14.8 million and $12.4 million, respectively. Domestic sales during the third quarter of fiscal 2005 were $14.5 million reflecting an increase of $2.3
million from year ago levels. Net sales for the nine-months ended June 30, 2005 and 2004 were $39.9 million and $42.8 million, respectively. Domestic sales during the nine- months of fiscal 2005 were $38.9 million reflecting a decrease of $3.0
million from year ago levels. Domestic sales for the nine-months were lower than the prior years due to the timing of finalizing certain orders and delays in customers obtaining required permits. The Companys revenues are concentrated in
the asphalt-related business and subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Foreign sales for the three- and nine- months ended June 30, 2005 increased by $.1 million from the prior year.



Gross margins as a percent of net sales decreased by 8.2% during the quarter from year ago
levels due to higher raw material cost, lower margins on several sales and a LIFO adjustment of $.2 million in the quarter. Gross margins as a percent of net sales decreased by 6.1% during the nine-months from year ago levels due to lower sales
volumes, higher raw material costs, lower margins on several sales and a LIFO adjustment of $.3 million in the nine-months.



Product engineering and development costs combined with selling and administrative expenses for the nine- months have decreased from year ago levels. Selling and
administrative expense decreased due to lower sales commission on lower volume.



The Company received no distributions in fiscal 2004 from its interest in Carbontronics LLC, Carbontronics Fuels LLC and Carbontronics II LLC. Distributions suspended since August 2003 resumed and the Company received distributions totaling
$6,964 and $34,346, respectively, for the three- and nine-months ended June 30, 2005. Future distributions from these partnerships depend upon the production of these operations continuing to qualify 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.



Interest expense for the three- months ended June 30, 2005 decreased by $10, respectively from the prior year. Interest expense for the nine- months ended June 30, 2005 increased by $11, respectively from the previous
year, reflecting an increase in interest rates, an increase in debt balance as of December 31, 2004 and a lower balance during the second and third fiscal quarters.



Income tax expense decreased by $.1 million and increased by $8.3 million for the three- and nine- month period, respectively from the
previous year, reflecting the increase in pre-tax income. The tax provision for the quarter and nine- months ended June 30, 2005, includes a reduction of $2.5 million in the tax contingency reserve as a result of resolution of prior year filings and
expiration of the statute of limitations. Deferred taxes are a result of Income from Investees which is deferred for income tax purposes until the next fiscal year



In June 2005, the assets of our discontinued operation in Brazil were disposed of with all proceeds used to pay liens and claims against the
property. The net assets were fully reserved in 2001 when the other assets of the discontinued operation were sold. Other Assets of $3.2 million, Property and Equipment of $3.5 million, Accounts Payable, Income and Other Taxes Payable and Accruals
of $2.9 million, Other Liabilities of $3.3 million, and Accumulated Translation Loss of $4.3 million were charged to the impairment reserve with no resulting gain or loss on the disposition.



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Liquidity and Capital Resources



On August 1, 2003, the Company entered into a Revolving Credit and Security Agreement with PNC Bank, N.A. The Agreement established a three
year revolving $20 million credit facility. The facility provides for advances based on accounts receivable, inventory and real estate. As of June 30, 2005, the Company had no monies borrowed on the facility. The facility includes a $2 million limit
on letters of credit. At June 30, 2005, the Company had $.3 million of letters of credit outstanding. The interest rate at June 30, 2005, is at prime less .25% (6.00%) and subject to change based upon the Fixed Charge Coverage Ratio. The Company is
required to maintain a Fixed Charge Coverage Ratio of 1.1:1. There are no required repayments as long as there are no defaults and there is adequate eligible collateral. Substantially all of the Companys assets are pledged as security under
the Agreement.



Long term bank debt was paid in full and the Company invested
$25 million in marketable securities as a result of the positive cash flow for the nine-months ended June 30, 2005.



Seasonality



The Company is concentrated in the asphalt-related business and is subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Traditionally, the Companys 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 the Companys fiscal year ended September 30.



Forward-Looking Information



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



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Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Company operates manufacturing facilities and sales offices principally located in the United States and the United Kingdom. The Company is subject to business risks inherent in non-U.S. activities, including
political and economic uncertainty, import and export limitations, and market risk related to changes in interest rates and foreign currency exchange rates. The Companys principal currency exposure against the U.S. dollar is the British pound.
Periodically, the Company has used derivative financial instruments consisting primarily of interest rate hedge agreements to manage exposures to interest rate changes. The Companys objective in managing its exposure to changes in interest
rates on its variable rate debt is to limit the impact of such changes on earnings and cash flow and to reduce its overall borrowing costs.



At June 30, 2005, the Company had no debt outstanding. Under the Credit Agreement, the Companys borrowings will bear interest at variable rates based upon the prime
rate.



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Item 4. Controls and Procedures



The Companys Chairman and Chief Financial Officer evaluated the Companys disclosure controls and procedures within 90 days of the filing date of this quarterly report. Based upon this evaluation, the Companys President and
Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange
Commission.



There were no significant changes in the
Companys internal controls or, to the knowledge of the management of the Company, in other factors that could significantly affect internal controls during our most recently completed fiscal quarter.



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##### Table of Contents

Part II. Other Information



Item 5. Other Information



The
Companys next Annual Meeting of Shareholders will be held on September 12, 2005 at 9:00 a.m. local time, at the Companys Corporate Offices, 5201 North Orange Blossom Trail, Orlando, Florida. The record date for the meeting has been set
for August 22, 2005.



On August 11, 2005, the Compensation
Committee approved a bonus for the Chairman of the Company. The bonus will be 3⁄4 of 1% of the income received by the Company from its synthetic fuels investees during and for the fiscal year ending September 30, 2005.



Item 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits
|--- | --------



|      |  |                                                                                                                                 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------
|10.12 |  | First Amendment to the Stock Option Plan Agreement.                                                                             
|      | 
|31.1  |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                             
|      | 
|31.2  |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                             
|      | 
|32    |  | Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|(b) | Reports on Form 8-K.
|--- | --------------------



May 20, 2005- Gencor Receives Cash Distribution from Investees.



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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 15, 2005 |  | By:                     |  | /s/ E.J. Elliott                                  
|                |  |                         |  | E.J. Elliott, Chairman and Chief Executive Officer
|                |  |                        
|August 15, 2005 |  | By:                     |  | /s/ Scott W. Runkel                               
|                |  |                         |  | Scott W. Runkel, Chief Financial Officer          



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