##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    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
 o
    
    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 0-22583
 ORBIT/FR, Inc.
 (Exact Name of Registrant as Specified in its Charter)
 DELAWARE
    
    23-2874370(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)506 Prudential Road, Horsham, PA
    
    19044(Address of principal executive offices)
    
    (Zip Code)
 (215) 674-5100
(Registrants telephone number, including area code)
 Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 o o
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a Smaller Reporting Company)
    
    Smaller Reporting Company þ
 o þ




---



##### 



ORBIT/FR, Inc.
 Index
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsCondensed Consolidated Balance SheetsJune 30, 2009
(Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of OperationsThree and six months
ended June 30, 2009 and 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows Six months
ended June 30, 2009 and 2008 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements
(Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosure of Market Risk
    
    
    17Item 4. Controls and procedures
    
    
    18PART II. Other InformationItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits and Reports on Form 8-K
    
    
    19Signatures
    
    
    21EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



ORBIT/FR, Inc.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 June 30,
    
    
    December 31,2009
    
    
    2008UnauditedASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,783
    
    
    $
    1,521Accounts receivable, less allowance of
$45 in 2009 and 2008, respectively
    
    
    5,156
    
    
    
    7,660Inventory
    
    
    2,932
    
    
    
    2,353Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    2,735
    
    
    
    1,445Income tax refunds receivable
    
    
    505
    
    
    
    440Deferred income taxes
    
    
    1,111
    
    
    
    1,011Other
    
    
    584
    
    
    
    299Total current assets
    
    
    14,806
    
    
    
    14,729Property and equipment, net
    
    
    1,730
    
    
    
    1,319Deferred income taxes
    
    
    227
    
    
    
    327Cost in excess of net assets acquired
    
    
    301
    
    
    
    301Total assets
    
    $
    17,064
    
    
    $
    16,676LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,896
    
    
    $
    2,174Accounts payableCurrent and Former Parent
    
    
    793
    
    
    
    95Accrued expenses
    
    
    3,062
    
    
    
    3,364Short term bank financing
    
    
    185
    
    
    
    1,467Customer advances
    
    
    408
    
    
    
    675Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    3,488
    
    
    
    2,070Deferred income taxes
    
    
    124
    
    
    
    124Total liabilities, all current
    
    
    10,956
    
    
    
    9,969Stockholders equity:Preferred stock: $.01 par value:Authorized shares2,000,000Issued and outstanding sharesnone
    
    
    
    
    
    
    Common stock: $.01 par value:Authorized shares10,000,000Issued shares6,084,473
    
    
    61
    
    
    
    61Additional paid-in capital
    
    
    16,437
    
    
    
    16,383Accumulated deficit
    
    
    (10,147
    )
    
    
    (9,494
    )Treasury stock82,900 shares
    
    
    (243
    )
    
    
    (243
    )Total stockholders equity
    
    
    6,108
    
    
    
    6,707Total liabilities and stockholders equity
    
    $
    17,064
    
    
    $
    16,676
  3




---



##### Table of Contents



ORBIT/FR, Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Contract revenues
    
    $
    6,600
    
    
    $
    5,292
    
    
    $
    12,950
    
    
    $
    11,341Cost of revenues
    
    
    4,459
    
    
    
    3,766
    
    
    
    8,919
    
    
    
    8,843Gross profit
    
    
    2,141
    
    
    
    1,526
    
    
    
    4,031
    
    
    
    2,498Operating expenses:General and administrative:General and administrative-Microwave Vision Group
    
    
    391
    
    
    
    
    
    
    
    391
    
    
    
    General and administrative-other
    
    
    669
    
    
    
    653
    
    
    
    1,238
    
    
    
    1,467Sales and marketing:Sales and
marketing-Microwave Vision Group
    
    
    244
    
    
    
    
    
    
    
    244
    
    
    
    Sales and marketing-other
    
    
    911
    
    
    
    949
    
    
    
    1,824
    
    
    
    1,778Research and development
    
    
    377
    
    
    
    529
    
    
    
    712
    
    
    
    1,003Loss on disposal of assets
    
    
    154
    
    
    
    
    
    
    
    154
    
    
    
    Total operating expenses
    
    
    2,746
    
    
    
    2,131
    
    
    
    4,563
    
    
    
    4,248Operating income (loss)
    
    
    (605
    )
    
    
    (605
    )
    
    
    (532
    )
    
    
    (1,750
    )Compensation charge coincident
to change in control
    
    
    
    
    
    
    (969
    )
    
    
    
    
    
    
    (969
    )Other (loss), net
    
    
    (101
    )
    
    
    (71
    )
    
    
    (122
    )
    
    
    (117
    )(Loss) before income taxes
    
    
    (706
    )
    
    
    (1,645
    )
    
    
    (654
    )
    
    
    (2,836
    )Income tax expense (benefit)
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    (66
    )Net (loss) income
    
    $
    (706
    )
    
    $
    (1,677
    )
    
    $
    (654
    )
    
    $
    (2,770
    )Basic (loss) income per share
    
    $
    (0.12
    )
    
    $
    (0.28
    )
    
    $
    (0.11
    )
    
    $
    (0.46
    )Diluted (loss) income per share
    
    $
    (0.12
    )
    
    $
    (0.28
    )
    
    $
    (0.11
    )
    
    $
    (0.46
    )Weighted average number
basic common shares
    
    
    6,001,573
    
    
    
    6,001,573
    
    
    
    6,001,573
    
    
    
    6,001,573Weighted average number
diluted common shares
    
    
    6,001,573
    
    
    
    6,001,573
    
    
    
    6,001,573
    
    
    
    6,001,573
  4




---



##### Table of Contents



ORBIT/FR, Inc.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 Six months endedJune 30,2009
    
    
    2008Cash flows from operating activities:Net (loss)
    
    $
    (654
    )
    
    $
    (2,770
    )Adjustments to reconcile net (loss) income to net cash
used in operating activities:Depreciation and amortization
    
    
    167
    
    
    
    188Loss on disposal of fixed assets
    
    
    53
    
    
    
    Deferred income tax (benefit)
    
    
    
    
    
    
    (75
    )Non-cash compensation
    
    
    
    
    
    
    969Stock based compensation
    
    
    54
    
    
    
    83Changes in operating assets and liabilities:Accounts receivable
    
    
    2,504
    
    
    
    3,479Inventory
    
    
    (580
    )
    
    
    (265
    )Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    (1,290
    )
    
    
    (2,768
    )Income tax refunds receivable
    
    
    (65
    )
    
    
    (45
    )Other current assets
    
    
    (284
    )
    
    
    (35
    )Accounts payable and accrued expenses
    
    
    419
    
    
    
    (1,263
    )Accounts payableCurrent and Former Parent
    
    
    699
    
    
    
    459Customer advances
    
    
    (267
    )
    
    
    (365
    )Income taxes payable
    
    
    
    
    
    
    Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    1,418
    
    
    
    (218
    )Net cash provided by (used in) operating activities
    
    
    2,174
    
    
    
    (2,626
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (631
    )
    
    
    (200
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    71Net cash (used in) investing activities
    
    
    (631
    )
    
    
    (129
    )Cash flows from financing activities:Proceeds from short term notes payable
    
    
    400
    
    
    
    1,281Repayment of short term notes payable
    
    
    (1,681
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (1,281
    )
    
    
    1,281Net decrease in cash and cash equivalents
    
    
    262
    
    
    
    (1,474
    )Cash and cash equivalents at beginning of period
    
    
    1,521
    
    
    
    2,214Cash and cash equivalents at end of period
    
    $
    1,783
    
    
    $
    740Supplemental disclosures of cash flow information:Cash paid during the period for income taxes
    
    $
    77
    
    
    $
    169Cash paid during the period for interest
    
    $
    12
    
    
    $
    22
  5




---



##### Table of Contents



ORBIT/FR, Inc.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2009
(Amounts in thousands, except share and per share data)
 1. Ownership and Basis of Presentation
  2. Summary of Significant Accounting Policies
 Interim Financial Information
  6




---



##### Table of Contents



ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2009
(Amounts in thousands, except share and per share data)
 3. Inventory
  Parts and components
    
    $
    2,535Work-in-process
    
    
    397$
    2,932
 4. Property and Equipment
  Lab and computer equipment
    
    $
    2,643Office equipment
    
    
    336Transportation equipment
    
    
    45Furniture and fixtures
    
    
    10Fixed assets in progress
    
    
    5Leasehold improvements
    
    
    3713,410Less accumulated depreciation
    
    
    1,680Property and equipment, net
    
    $
    1,730
 7




---



##### Table of Contents



ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2009
(Amounts in thousands, except share and per share data)
 5. Accrued Expenses
  Contract costs
    
    $
    23Compensation
    
    
    1,388Commissions
    
    
    602Royalties
    
    
    58Warranty
    
    
    411Customer advances and deferred revenue
    
    
    168Other accruals
    
    
    412$
    3,062
 6. Long-Term Contracts
  Accumulated expenditures on uncompleted contracts
    
    $
    34,121Estimated earnings thereon
    
    
    8,957Total
    
    
    43,077Less: applicable progress billings
    
    
    43,830Total
    
    $
    (753
    )The long-term contracts are shown in the accompanying balance sheets as follows:Costs and estimated earnings on uncompleted
contracts in excess of billings
    
    $
    2,735Billings on uncompleted contracts in excess of
costs and estimated earnings
    
    
    (3,488
    )Total
    
    $
    (753
    )
 8




---



##### Table of Contents



ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2009
(Amounts in thousands, except share and per share data)
 7. Loss on Disposal of Assets
  8. Related Party Transactions
    9




---



##### Table of Contents



ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2009
(Amounts in thousands, except share and per share data)
 8. Related Party Transactions (continued)
  9. Segment and Geographic Information
  Three months ended June 30, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    3,085
    
    
    $
    2,708
    
    
    $
    807
    
    
    $
    6,600Cost of sales to unaffiliated customers
    
    
    2,191
    
    
    
    1,752
    
    
    
    516
    
    
    
    4,459Gross profit from unaffiliated customers
    
    $
    894
    
    
    $
    956
    
    
    $
    291
    
    
    $
    2,141
 Three months ended June 30, 2008
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    3,449
    
    
    $
    1,122
    
    
    $
    721
    
    
    $
    5,292Cost of sales to unaffiliated customers
    
    
    2,323
    
    
    
    720
    
    
    
    723
    
    
    
    3,766Gross profit from unaffiliated customers
    
    $
    1,126
    
    
    $
    402
    
    
    $
    (2
    )
    
    $
    1,526
 Six months ended June 30, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    6,235
    
    
    $
    3,395
    
    
    $
    3,320
    
    
    $
    12,950Cost of sales to unaffiliated customers
    
    
    4,286
    
    
    
    2,338
    
    
    
    2,295
    
    
    
    8,919Gross profit from unaffiliated customers
    
    $
    1,949
    
    
    $
    1,057
    
    
    $
    1,025
    
    
    $
    4,031
 Six months ended June 30, 2008
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    6,418
    
    
    $
    2,358
    
    
    $
    2,565
    
    
    $
    11,341Cost of sales to unaffiliated customers
    
    
    4,496
    
    
    
    1,834
    
    
    
    2,513
    
    
    
    8,843Gross profit from unaffiliated customers
    
    $
    1,922
    
    
    $
    524
    
    
    $
    52
    
    
    $
    2,498
  10




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
  Recent Events
  Critical Accounting Policies
 Revenue and Cost Recognition
  11




---



##### Table of Contents



Accounts Receivable
  Results of Operations
  Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008(Unaudited)
    
    (Unaudited)Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    32.4
    
    
    
    28.8
    
    
    
    31.1
    
    
    
    22.0General and
administrative
    
    
    10.1
    
    
    
    12.3
    
    
    
    9.6
    
    
    
    12.9Sales and marketing
    
    
    13.8
    
    
    
    17.9
    
    
    
    14.1
    
    
    
    15.7Research and development
    
    
    5.7
    
    
    
    10.0
    
    
    
    5.5
    
    
    
    8.8Microwave Vision Group
corporate expenses
    
    
    9.6
    
    
    
    
    
    
    
    4.9
    
    
    
    Loss on disposal of assets
    
    
    2.3
    
    
    
    
    
    
    
    1.1
    
    
    
    Operating (loss)
    
    
    (9.1
    )
    
    
    (11.4
    )
    
    
    (4.1
    )
    
    
    (15.4
    )Compensation charge
    
    
    
    
    
    
    (18.3
    )
    
    
    
    
    
    
    (8.5
    )(Loss) before income taxes
    
    
    (10.7
    )
    
    
    (31.1
    )
    
    
    (5.1
    )
    
    
    (25.0
    )Net (loss)
    
    
    (10.7
    )
    
    
    (31.7
    )
    
    
    (5.1
    )
    
    
    (24.4
    )
 Three months ended June 30, 2009 compared to three months ended June 30, 2008.
 Revenues.
 Cost of revenues.
 12




---



##### Table of Contents



General and administrative expenses-Microwave Vision Group.
 General and administrative expenses-other.
 Sales and marketing-Microwave Vision Group.
 Sales and marketing expenses-other.
 Research and development expenses.
 Loss on disposal of assets.
 Compensation charge
 13




---



##### Table of Contents



Other (loss)/income, net.
 Income taxes.
 Six months ended June 30, 2009 compared to six months ended June 30, 2008.
 Revenues.
 Cost of revenues.
 General and administrative expenses-Microwave Vision Group.
 General and administrative expenses-other.
 14




---



##### Table of Contents



Sales and marketing-Microwave Vision Group.
 Sales and marketing expenses-other.
 Research and development expenses.
 Loss on disposal of assets.
 Compensation charge
 Other (loss)/income net,
 15




---



##### Table of Contents



Income taxes.
 Liquidity and Capital Resources
     Inflation and Seasonality
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  16




---



##### Table of Contents



Item 4.
    
    Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures. The Companys disclosure controls and
procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) are
designed to ensure that information required to be disclosed by us in the reports that are
filed or submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. These disclosure controls and procedures include controls and
procedures designed to ensure that information required to be disclosed under the
Securities Exchange Act of 1934 is accumulated and communicated to our management on a
timely basis to allow decisions regarding required disclosure. The Company evaluated the
effectiveness of the design and operation of our disclosure controls and procedures as of
June 30, 2009. Based on this evaluation, the Companys Chief Executive Officer and Chief
Financial Officer previously concluded that as of June 30, 2009, these controls and
procedures were effective.
 (b)
    
    Change in Internal Control. There have been no changes in internal control over
financial reporting identified in connection with the foregoing evaluation that occurred
during the Companys fiscal quarter ended June 30, 2009 that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial
reporting.
 17




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of ProceedNot applicable
 
 Item 3. Defaults upon Senior SecuritiesNot applicable
 
 Item 4. Submission of Matters to a Vote of Security HoldersNot applicable
 
 Item 5. Other Information-
  
 Item 6. Exhibits
 31.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Per Iversen,
President and Chief Executive Officer.
 18




---



##### Table of Contents



31.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Relland Winand, Chief
Financial Officer.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Per Iversen,
President and Chief Executive Officer.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Relland Winand, Chief
Financial Officer.
 19




---



##### Table of Contents



ORBIT/FR, Inc.
 
 SIGNATURES
  Orbit/FR, Inc.Registrant  /s/  Per IversenPresident and Chief Executive Officer  /s/  Relland WinandChief Financial Officer 20