<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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 0-22583

                                 ORBIT/FR, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                          <C>
                DELAWARE                                          23-2874370
      (STATE OR OTHER JURISDICTION                             (I.R.S. EMPLOYER
    OF INCORPORATION OR ORGANIZATION)                        IDENTIFICATION NO.)
</TABLE>

<TABLE>
<S>                                                               <C>
    506 PRUDENTIAL ROAD, HORSHAM, PA                                19044
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)
</TABLE>

                                 (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)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

     There were 6,084,473 shares of common stock, $.01 par value, outstanding as
of November 14, 2005.

================================================================================

<PAGE>

                                 ORBIT/FR, INC.

                                      INDEX

<TABLE>
                                                                        PAGE NO.
                                                                        --------
<S>                                                                     <C>
PART I. FINANCIAL INFORMATION

         Item 1.   Consolidated Financial Statements

                   Consolidated Balance Sheets--September 30, 2005
                   (Unaudited) and December 31, 2004.................       3

                   Consolidated Statements of Operations-- Three and
                   nine months ended September 30, 2005 and 2004
                   (Unaudited).......................................       4

                   Consolidated Statements of Cash Flows-- Nine
                   months ended September 30, 2005 and 2004
                   (Unaudited).......................................       5

                   Notes to Consolidated Financial Statements
                   (Unaudited).......................................       6

         Item 2.   Management's Discussion and Analysis of Financial
                   Condition and Results of Operations...............      10

         Item 3.   Quantitative and Qualitative Disclosure of Market
                   Risk..............................................      13

         Item 4    Controls and procedures...........................      14

PART II. Other Information

         Item 1.   Legal Proceedings.................................      15

         Item 2.   Unregistered Sales of Equity Securities and Use of
                   Proceeds..........................................      15

         Item 3.   Defaults upon Senior Securities...................      15

         Item 4.   Submission of Matters to a Vote of Security
                   Holders...........................................      15

         Item 5.   Other Information.................................      15

         Item 6.   Exhibits and Reports on Form 8-K..................      15

Signatures...........................................................      16
</TABLE>


                                                                               2

<PAGE>

                                 ORBIT/FR, INC.
                           CONSOLIDATED BALANCE SHEETS
                    (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                          SEPTEMBER, 30   DECEMBER 31,
                                                               2005           2004
                                                          -------------   ------------
                                                            UNAUDITED
<S>                                                       <C>             <C>
                         ASSETS
Current assets:
   Cash and cash equivalents                                 $ 1,808        $ 2,814
   Accounts receivable, less allowance of $216 and $164
      in 2005 and 2004, respectively                           4,056          4,482
   Inventory                                                   2,625          2,265
   Costs and estimated earnings in excess of billings
      on uncompleted contracts                                 1,729            659
   Income tax refunds receivable                                 413            241
   Deferred income taxes                                         304            293
   Other                                                         730            447
                                                             -------        -------
Total current assets                                          11,665         11,201

Property and equipment, net                                    1,190          1,376
Deferred income taxes                                            184            158
Cost in excess of net assets acquired                            381            381
                                                             -------        -------
Total assets                                                 $13,420        $13,116
                                                             =======        =======

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                          $ 1,421        $ 1,167
   Accounts payable--Parent                                      365            521
   Accrued expenses                                            2,529          2,674
   Customer advances                                             833            764
   Income taxes payable                                           31             20
   Billings in excess of costs and estimated earnings
      on uncompleted contracts                                 1,948          1,745
   Deferred income taxes                                         125            125
                                                             -------        -------
Total liabilities, all current                                 7,252          7,016
                                                             -------        -------
Stockholders' equity:
   Preferred stock: $.01 par value:
      Authorized shares--2,000,000
      Issued and outstanding shares--none                         --             --
   Common stock: $.01 par value:
      Authorized shares--10,000,000
      Issued shares--6,084,473                                    61             61
   Additional paid-in capital                                 15,173         15,173
   Accumulated deficit                                        (8,823)        (8,891)
   Treasury stock--82,900 shares                                (243)          (243)
                                                             -------        -------
Total stockholders' equity                                     6,168          6,100
                                                             -------        -------
Total liabilities and stockholders' equity                   $13,420        $13,116
                                                             =======        =======
</TABLE>

                             See accompanying notes.


                                                                               3

<PAGE>

                                 ORBIT/FR, INC.

                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED        NINE MONTHS ENDED
                                                 SEPTEMBER 30,             SEPTEMBER 30,
                                            -----------------------   -----------------------
                                               2005         2004         2005         2004
                                            ----------   ----------   ----------   ----------
<S>                                         <C>          <C>          <C>          <C>
Contract revenues                           $    4,926   $    4,977   $   16,470   $   15,069
Cost of revenues                                 3,207        3,113       11,223        9,602
                                            ----------   ----------   ----------   ----------
Gross profit                                     1,719        1,864        5,247        5,467
                                            ----------   ----------   ----------   ----------
Operating expenses:
   General and administrative                      635          559        1,793        1,888
   Sales and marketing                             756          731        2,435        1,942
   Research and development                        301          228          826          717
                                            ----------   ----------   ----------   ----------
Total operating expenses                         1,692        1,518        5,054        4,547
                                            ----------   ----------   ----------   ----------
Operating income                                    27          346          193          920
Other expense, net                                 (36)          (9)         (49)         (39)
                                            ----------   ----------   ----------   ----------
Income (loss) before income tax
   expense (benefit)                                (9)         337          144          881
Income tax expense (benefit)                        17          (90)          76           34
                                            ----------   ----------   ----------   ----------
Net income (loss)                           $      (26)  $      427   $       68   $      847
                                            ==========   ==========   ==========   ==========
Basic and diluted income (loss) per share   $    (0.00)  $     0.07   $     0.01   $     0.14
                                            ==========   ==========   ==========   ==========
Weighted average number
   common shares - basic and diluted         6,001,573    6,001,573    6,001,573    6,001,573
                                            ==========   ==========   ==========   ==========
</TABLE>

                             See accompanying notes.


                                                                               4

<PAGE>

                                 ORBIT/FR, INC.

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                            -----------------
                                                               2005     2004
                                                             -------   ------
<S>                                                         <C>        <C>
Cash flows from operating activities:
Net income                                                   $    68   $  847
Adjustments to reconcile net income to net cash (used in)
   provided by operating activities:
   Depreciation                                                  358      304
   Deferred income tax benefit                                   (37)       5
   Changes in operating assets and liabilities
      Accounts receivable                                        426      (90)
      Inventory                                                 (360)    (772)
      Costs and estimated earnings in excess of billings
         on uncompleted contracts                             (1,070)    (256)
      Income tax refunds receivable                             (172)      --
      Other assets                                              (283)    (149)
      Accounts payable and accrued expenses                      109     (168)
      Accounts payable--Parent                                  (156)   1,030
      Income taxes payable                                        11       (2)
      Customer advances                                           69      (44)
      Billings in excess of costs and estimated earnings
         on uncompleted contracts                                203     (370)
                                                             -------   ------
Net cash (used in) provided by operating activities             (834)     335
                                                             -------   ------
Cash flows from investing activities:
   Purchase of equipment                                        (172)    (337)
                                                             -------   ------
Net cash used in investing activities                           (172)    (337)
                                                             -------   ------
Cash flows from financing activities:
   Short-term bank loan                                           --      498
                                                             -------   ------
Net cash provided by financing activities                         --      498
                                                             -------   ------
Net (decrease) increase in cash and cash equivalents          (1,006)     496
Cash and cash equivalents at beginning of year                 2,814    2,413
                                                             -------   ------
Cash and cash equivalents at end of period                   $ 1,808   $2,909
                                                             =======   ======
Supplemental disclosures of cash flow information:
Net cash paid during the period for income taxes             $   187   $  126
                                                             =======   ======
</TABLE>

                             See accompanying notes


                                                                               5

<PAGE>

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2005
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. OWNERSHIP AND BASIS OF PRESENTATION

     ORBIT/FR, Inc. (the "Company"), was incorporated in Delaware on December 9,
1996, as a wholly owned subsidiary of Orbit-Alchut Technologies, Ltd., an
Israeli publicly traded corporation (hereinafter referred to as the "Parent").
The Company develops, markets, and supports sophisticated automated microwave
test and measurement systems for the wireless communications, satellite,
automotive, aerospace/defense and electromagnetic compatibility (EMC)
industries, and manufactures anechoic foam, a microwave absorbing material that
is an integral component of microwave test and measurement systems. ORBIT/FR,
Inc., a holding company, supports its world wide customers through its
subsidiaries ORBIT/FR Engineering, LTD (hereinafter referred to as
"Engineering", Israel), ORBIT/FR Europe, ("Germany"), Advanced Electromagnetics,
Inc. ("AEMI", San Diego, CA), and Orbit Advanced Technologies, Inc. and Flam and
Russell, Inc. (Horsham, PA). The Company sells its products to customers
throughout Asia, Europe, Israel, and North and South America.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information

     The accompanying unaudited consolidated financial statements for the three
and nine months ended September 30, 2005 and 2004 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 adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial statements have been included. The results of interim
periods are not necessarily indicative of the results that may be expected for
the year ending December 31, 2005. The consolidated financial statements and
footnotes should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in this Form
10-Q and the Company's Form 10-K for the year ended December 31, 2004 filed with
the Securities and Exchange Commission, which included the consolidated
financial statements and footnotes for the year ended December 31, 2004.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions of the Company and its wholly-owned subsidiaries have been
eliminated in consolidation.

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts in the financial statements
and accompanying notes. Actual results could differ from those estimates.


                                                                               6

<PAGE>

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2005
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Income (Loss) Per Share

     Basic income (loss) per share is calculated by dividing net income (loss)
by the weighted average common shares outstanding for the period. Diluted income
(loss) per share is calculated by dividing net income (loss) by the weighted
average common shares outstanding for the period plus the dilutive effect of
stock options. The dilutive effect of stock options was not assumed for the
three and nine months ended September 30, 2005 and 2004 because the effect of
these securities is antidilutive.

3. INVENTORY

     Inventory consists of the following:

<TABLE>
<CAPTION>
                       SEPTEMBER 30,   DECEMBER 31,
                            2005           2004
                       -------------   ------------
                        (UNAUDITED)
<S>                    <C>             <C>
Work-in-process            $1,163         $1,460
Parts and components        1,462            805
                           ------         ------
                           $2,625         $2,265
                           ======         ======
</TABLE>

4. PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                SEPTEMBER 30,   DECEMBER 31,
                                     2005           2004
                                -------------   ------------
                                 (UNAUDITED)
<S>                             <C>             <C>
Lab and computer equipment          $2,292         $2,292
Office equipment                       935            963
Transportation equipment               458            396
Furniture and fixtures                  14             15
Leasehold improvements                 286            290
                                    ------         ------
                                     3,985          3,956
Less accumulated depreciation        2,795          2,580
                                    ------         ------
Property and equipment, net         $1,190         $1,376
                                    ======         ======
</TABLE>


                                                                               7

<PAGE>

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2005
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

5. ACCRUED EXPENSES

     Accrued expenses consists of the following:

<TABLE>
<CAPTION>
                               SEPTEMBER 30,   DECEMBER 31,
                                    2005           2004
                               -------------   ------------
                                (UNAUDITED)
<S>                            <C>             <C>
Accrued contract costs             $  435         $  602
Accrued compensation                1,127          1,038
Accrued commissions                   234            206
Accrued royalties                      53             87
Accrued warranty                      352            413
Accrued DTC settlement costs           67            100
Other accruals                        261            228
                                   ------         ------
                                   $2,529         $2,674
                                   ======         ======
</TABLE>

6. LONG-TERM CONTRACTS

<TABLE>
<CAPTION>
                                     SEPTEMBER 30,   DECEMBER 31,
                                          2005           2004
                                     -------------   ------------
                                      (UNAUDITED)
<S>                                  <C>             <C>
Accumulated expenditures on
   uncompleted contracts                $ 8,721        $ 9,578
Estimated earnings thereon                2,434          2,477
                                        -------        -------
                                         11,155         12,055
Less: applicable progress billings       11,374         13,141
                                        -------        -------
   Total                                $  (219)       $(1,086)
                                        =======        =======

The long-term contracts are shown
in the accompanying balance sheets
as follows:

Costs and estimated earnings on
   uncompleted contracts in excess
   of billings                          $ 1,729        $   659
Billings on uncompleted contracts
   in excess of costs and
   estimated earnings                    (1,948)        (1,745)
                                        -------        -------
                                        $  (219)       $(1,086)
                                        =======        =======
</TABLE>

7. RELATED PARTY TRANSACTIONS

     Engineering and the Parent have an agreement, whereby Engineering purchases
from the Parent electrical and mechanical production services. In addition, the
Parent provides other administrative services, including, but not limited to,
bookkeeping, computer, legal, accounting, cost management, information systems,
and production support. Engineering pays the Parent for these services based
upon a rate of cost of production services plus 21%. Engineering is leasing
office space from the Parent on an annual basis, for a rental of $61 per year.
These agreements are evaluated on an annual basis.


                                                                               8

<PAGE>

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2005
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

8. SEGMENT AND GEOGRAPHIC INFORMATION

     The Company operates exclusively in one industry segment, the business of
developing, marketing and supporting sophisticated automated microwave test and
measurement systems. In addition to its principal operations and markets in the
United States, the Company conducts sales, customer support and service
operations out of other geographic locations in Europe, Asia, and North America.
The following table represents financial information by geographic region for
the three and nine months ended September 30, 2005 and 2004.

<TABLE>
<CAPTION>
Three months ended September 30, 2005     North America   Europe    Asia     Total
-------------------------------------     -------------   ------   ------   ------
<S>                                       <C>             <C>      <C>      <C>
Sales to unaffiliated customers               $3,039       $535    $1,352   $4,926
Cost of sales to unaffiliated customers        2,048        339       820    3,207
                                              ------       ----    ------   ------
Gross profit unaffiliated customers           $  991       $196    $  532   $1,719
                                              ======       ====    ======   ======
</TABLE>

<TABLE>
<CAPTION>
Three months ended September 30, 2004     North America   Europe    Asia     Total
-------------------------------------     -------------   ------   ------   -------
<S>                                       <C>             <C>      <C>      <C>
Sales to unaffiliated customers               $2,888      $1,064   $1,025   $ 4,977
Cost of sales to unaffiliated customers        1,644         822      647     3,113
                                              ------      ------   ------   -------
Gross profit unaffiliated customers           $1,244      $  242   $  378   $ 1,864
                                              ======      ======   ======   =======
</TABLE>

<TABLE>
<CAPTION>
Nine months ended September 30, 2005      North America   Europe    Asia     Total
------------------------------------      -------------   ------   ------   -------
<S>                                       <C>             <C>      <C>      <C>
Sales to unaffiliated customers              $10,379      $1,976   $4,115   $16,470
Cost of sales to unaffiliated customers        7,282       1,277    2,664    11,223
                                             -------      ------   ------   -------
Gross profit unaffiliated customers          $ 3,097      $  699   $1,451   $ 5,247
                                             =======      ======   ======   =======
</TABLE>

<TABLE>
<CAPTION>
Nine months ended September 30, 2004      North America   Europe    Asia     Total
------------------------------------      -------------   ------   ------   -------
<S>                                       <C>             <C>      <C>      <C>
Sales to unaffiliated customers               $8,591      $3,088   $3,390   $15,069
Cost of sales to unaffiliated customers        5,587       1,896    2,119     9,602
                                              ------      ------   ------   -------
Gross profit unaffiliated customers           $3,004      $1,192   $1,271   $ 5,467
                                              ======      ======   ======   =======
</TABLE>

     In table above "North America" includes all United States operations, and
"Europe" includes subsidiaries in Germany and Israel.

9. INCOME TAXES

Income tax expense was not recorded during the three and nine months ended
September 30, 2005 on the Company's profitable domestic operations as previous
income tax benefits on losses were reserved for in prior periods. The Company
has reflected income tax expense on profitable foreign operations during the
three and nine months ended September 30, 2005 and 2004.


                                                                               9

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD LOOKING STATEMENTS

     Certain information contained in this Form 10-Q contains forward looking
statements (as such term is defined in the Securities Exchange Act of 1934 and
the regulations thereunder), including without limitation, statements as to the
Company's financial condition, results of operations and liquidity and capital
resources and statements as to management's beliefs, expectations or options.
Such forward looking statements are subject to risks and uncertainties and may
be affected by various factors which may cause actual results to differ
materially from those in the forward looking statements. Certain of these risks,
uncertainties and other factors, as and when applicable, are discussed in the
Company's filings with the Securities and Exchange Commission including its
Registration Statement on Form S-1 and in its most recent Annual Report on Form
10-K, as amended, a copy of which may be obtained from the Company upon request
and without charge (except for the exhibits thereto).

RECENT EVENTS

     On September 6, 2005, the Company announced it had reached a final
settlement with the Office of Defense Trade Controls Compliance, Directorate of
Defense Trade Control (DDTC) of the United States Department of State,
terminating as of August 29, 2005 the statutory debarment that prohibited the
Company's direct or indirect participation in exports subject to the
International Traffic in Arms Regulations (ITAR). Accordingly, under the terms
of the Consent Agreement DDTC will resume the normal processing of license
applications involving the Company.

     As part of the settlement, the Company entered into a Consent Agreement
with DDTC regarding all civil charges, penalties and sanctions arising out of
these export violations. The Company has agreed to pay a penalty in the amount
of $100,000, payable in three annual installments. An additional penalty in the
amount of $200,000 has been assessed to cover the costs to be incurred by the
Company and its affiliates during the next three years to implement compliance
measures mandated by the Consent Agreement. Under the terms of the Consent
Agreement, an additional penalty of $200,000 has been assessed, but is suspended
on condition that the Company and its affiliates comply with the foregoing
foreign export restrictions. The Company further agreed that, for a period of
six years, its foreign direct subsidiaries will not export any non-US defense
article or furnish any non-US defense service to any country identified in ITAR
Part 126 without the consent of the Assistant Secretary of State for
Political-Military Affairs. The Company's foreign affiliates have agreed to
comply with a similar restriction for a period of three years.

     During 2004, the Israeli Ministry of Defense implemented a policy
temporarily suspending the export of all Israeli military products to the far
east, which currently affects our Israeli subsidiary's ability to deliver
products manufactured totaling approximately $1.2 million. Although it cannot
guarantee this suspension will be lifted in the foreseeable future, the Company
feels its current reserves are adequate to cover any related losses which may
occur as a result of the cancellation of the related contracts.

RESULTS OF OPERATIONS

     The following table sets forth certain financial data as a percentage of
revenues for the periods indicated:


                                                                              10

<PAGE>

<TABLE>
<CAPTION>
                                  THREE MONTHS ENDED   NINE MONTHS ENDED
                                     SEPTEMBER 30,       SEPTEMBER 30,
                                  ------------------   -----------------
                                     2005    2004         2005    2004
                                    -----   -----        -----   -----
<S>                               <C>       <C>        <C>       <C>
Revenues                            100.0%  100.0%       100.0%  100.0%
Gross profit                         34.9    37.5         31.9    36.3
General and
   administrative                    12.9    11.2         10.9    12.5
Sales and marketing                  15.3    14.7         14.8    12.9
Research and development              6.1     4.6          5.0     4.8
Operating income                      0.5     7.0          1.2     6.1
Income (loss) before
   income tax expense (benefit)      (0.2)    6.8          0.9     5.9
Net income (loss)                    (0.5)    8.6          0.4     5.6
</TABLE>

THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2004.

     Revenues. Revenues for the three months ended September 30, 2005 were
approximately $4.9 million compared to approximately $5.0 million for the three
months ended September 30, 2004, a decrease of approximately $51,000 or 1%.
Revenues from the wireless, EMC and satellite markets increased approximately
$449,000, $138,000 and $37,000 respectively, while revenues from the defense,
automotive, and university markets decreased $576,000, $66,000 and $33,000,
respectively. Geographically, Asian and North American revenues increased
approximately $327,000 and $151,000, respectively, while revenues from Europe
decreased approximately $529,000 from prior year levels.

     Cost of revenues. Cost of revenues for the three months ended September 30,
2005 were approximately $3.2 million compared to approximately $3.1 million for
the three months ended September 30, 2004, an increase of approximately $94,000
or 3%. Gross margins decreased to 35% for the three months ended September 30,
2005 from 38% for the three months ended September 30, 2004. The decreased gross
margins are the result of cost overruns on large US defense contracts and a more
competitive market environment.

     General and administrative expenses. General and administrative expenses
for the three months ended September 30, 2005 were $635,000 compared to $559,000
for the three months ended September 30, 2004, an increase of approximately
$76,000 or 14%. As a percentage of revenues, general and administrative expenses
increased to 12.9% for the three months ended September 30, 2005 from 11.2% for
the three months ended September 30, 2004. The increased costs are largely a
result of increases in bad debt reserves in the three months ended September 30,
2005.

     Sales and marketing expenses. Sales and marketing expenses for the three
months ended September 30, 2005 were $756,000 compared to $731,000 for the three
months ended September 30, 2004, an increase of approximately $25,000 or 3%. As
a percentage of revenues, sales and marketing expenses increased to 15.3% for
the three months ended September 30, 2005, from 14.7% for the three months ended
September 30, 2004. The increased sales and marketing expenses were largely due
to increased marketing efforts in Europe and Asia.

     Research and development expenses. Research and development expenses for
the three months ended September 30, 2005 were $301,000 compared to $228,000 for
the three months ended September 30, 2004, an increase of approximately $73,000
or 32%. Research and development expenses incurred during the three months ended
September 30, 2005 related primarily to general software product enhancements.


                                                                              11

<PAGE>

     Other expense, net. Other expense, net for the three months ended September
30, 2005 was approximately $36,000 compared to $9,000 for the three months ended
September 30, 2004, an increase of approximately $27,000. The Company recognizes
interest income and expense and foreign currency translation gains and losses as
other income (expense).

     Income tax expense (benefit). Income tax expense for the three months ended
September 30, 2005 was $17,000 compared to a $90,000 benefit for the three
months ended September 30, 2004, an increase in expense of $107,000. The Company
records income tax expense on profitable operations and income tax benefits on
losses recorded by its subsidiaries where applicable. Income tax expense was not
recorded during the three months ended September 30, 2005 on the Company's
profitable domestic operations as previously recorded deferred income tax
benefits on losses were reserved for.

NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
2004.

     Revenues. Revenues for the nine months ended September 30, 2005 were
approximately $16.5 million, compared to approximately $15.1 million for the
nine months ended September 30, 2004, an increase of approximately $1.4 million
or 9%. Revenues from the wireless, defense, and EMC markets increased
approximately $1.5 million, $257,000, and $219,000 respectively, while revenues
from the automotive, satellite, and university markets decreased approximately
$337,000, $169,000, and $49,000, respectively. Geographically, revenues from
North America and Asia increased approximately $1.8 million and $725,000,
respectively, while revenues from Europe decreased approximately $1.1 million
from prior year levels.

     Cost of revenues. Cost of revenues for the nine months ended September 30,
2005 were approximately $11.2 million compared to approximately $9.6 million for
the nine months ended September 30, 2004, an increase of approximately $1.6
million or 17%. Gross margins decreased to 32% for the nine months ended
September 30, 2005 from 36% for the nine months ended September 30, 2004. The
decreased gross margins are the result of cost overruns on large US defense
contracts and a more competitive market environment.

     General and administrative expenses. General and administrative expenses
for the nine months ended September 30, 2005 were approximately $1.8 million
compared to approximately $1.9 million for the nine months ended September 30,
2004, a decrease of approximately $95,000 or 5%. As a percentage of revenues,
general and administrative expenses decreased to 10.9% for the nine months ended
September 30, 2005 from 12.5 % for the nine months ended September 30, 2004. The
decreased costs are largely a result of decreases in compliance costs incurred
during the nine months ended September 30, 2005.

     Sales and marketing expenses. Sales and marketing expenses for the nine
months ended September 30, 2005 were approximately $2.4 million, compared to
approximately $1.9 million for the nine months ended September 30, 2004, and
increase of approximately $493,000. As a percentage of revenues, sales and
marketing expenses increased to 14.8% for the nine months ended September 30,
2005, from 12.9% for the nine months ended September 30, 2004. The increased
sales and marketing expenses were largely due to increased marketing efforts in
Europe and Asia.

     Research and development expenses. Research and development expenses for
the nine months ended September 30, 2005 were $826,000 compared to $717,000 for
the nine months ended September 30, 2004, an increase of approximately $109,000
or 15%. The increase is due both to research and development efforts expended
during the nine months ended September 30, 2005 on the Company's 959 Spectrum
software product, and to the Company utilization of its R&D resources to meet
contract deadlines in 2004. As a percentage of revenues, research and
development expenses increased to 5.0% for the nine months ended September 30,
2005, from 4.8% for the nine months ended September 30, 2004.


                                                                              12

<PAGE>

     Other expense, net. Other expense, net for the nine months ended September
30, 2005 was approximately $49,000 compared to $39,000 for the nine months ended
September 30, 2004, an increase of approximately $10,000. The Company recognizes
interest income and expense and foreign currency translation gains and losses as
other income (loss).

     Income taxes. Income tax expense for the nine months ended September 30,
2005 was $76,000 compared to $34,000 of income tax expense for the nine months
ended September 30, 2004. The Company records income tax expense on profitable
operations and income tax benefits on losses recorded by its subsidiaries where
applicable. Income tax expense was not recorded during the nine months ended
September 30, 2005 on the Company's profitable domestic operations as previously
recorded deferred income tax benefits on losses were reserved for.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operating activities during the nine months ended
September 30, 2005 was approximately $834,000 compared to approximately $335,000
provided by operating activities during the nine months ended September 30,
2004. The Company's net income, adjusted for non-cash items, provided $389,000
of operating cash for the nine months ended September 30, 2005, compared to $1.2
million provided during the nine months ended September 30, 2004. Changes in the
Company's operating assets and liabilities during the nine months ended
September 30, 2005 used $1.2 million in operating cash compared to $821,000 used
during the nine months ended September 30, 2004.

     Net cash provided by financing activities during the nine months ended
September 30, 2004 totaled $498,000. There was no net cash provided by financing
activities during the nine months ended September 30, 2005.

     Net cash used in investing activities during the nine months ended
September 30, 2005 for the purchase of property and equipment was approximately
$172,000 compared to approximately $337,000 during the nine months ended
September 30, 2004.

     The Company has exposure to currency fluctuations as a result of billing
certain of its contracts in foreign currency. When selling to customers in
countries with less stable currencies, the Company bills in U.S. dollars. For
the nine months ended September 30, 2005, approximately 86% of the Company's
revenues were billed in U.S. dollars. Substantially all of the costs of the
Company's contracts, including costs subcontracted to the Parent, have been, and
will continue to be, U.S. dollar-denominated except for wages for employees of
the Company's Israeli and German subsidiaries, which are denominated in local
currency. The Company intends to continue to enter into U.S. dollar-denominated
contracts.

INFLATION AND SEASONALITY

     The Company does not believe that inflation or seasonality has had a
significant effect on the Company's operations to date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from fluctuations in foreign currency
exchange rates. We manage exposure to variability in foreign currency exchange
rates primarily through the use of natural hedges, as both liabilities and
assets are denominated in the local currency. However, different durations in
our funding obligations and assets may expose us to the risk of foreign exchange
rate fluctuations. We have not entered into any derivative instrument
transactions to manage this risk. Based on our overall foreign


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<PAGE>

currency rate exposure at September 30, 2005, we do not believe that a
hypothetical 10% change in foreign currency rates would materially adversely
affect our financial position.

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 Securities Exchange Act of 1934, as amended
          (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 Exchange Act 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 Exchange Act 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 the end of the period covered by this report (the "Evaluation
          Date"). Based on this evaluation, the Company's Chief Executive
          Officer and Chief Financial Officer concluded that as of the
          Evaluation Date, these controls and procedures were effective.

     (b)  Change in Internal Controls. There have been no changes in internal
          control over financial reporting identified in connection with the
          foregoing evaluation that occurred during the Company's most recently
          completed fiscal quarter that have materially affected, or are
          reasonably likely to materially affect, the Company's internal control
          over financial reporting.


                                                                              14

<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company is not currently subject to any material legal proceedings and
is not aware of any threatened litigation, unasserted claims or assessments that
could have a material adverse effect on the Company's business, operating
results, or financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - 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--NOT APPLICABLE

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, Israel
               Adan, President and Chief Executive Officer.

          31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
               pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Dave
               Lubbe, 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, Israel
               Adan, 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, Dave
               Lubbe, Chief Financial Officer.


                                                                              15

<PAGE>

ORBIT/FR, INC.

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.

                                        ORBIT/FR, INC.
                                        Registrant

Date: November 14, 2005


                                        /s/ Israel Adan
                                        ----------------------------------------
                                        President and Chief Executive Officer

Date: November 14, 2005


                                        /s/ Dave Lubbe
                                        ----------------------------------------
                                        Chief Financial Officer


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