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 September 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.
  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
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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ORBIT/FR, Inc.
 Index
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial StatementsCondensed Consolidated Balance SheetsSeptember 30, 2009
(Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of OperationsThree and nine months
ended September 30, 2009 and 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows nine months
ended September 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
    
    
    17PART 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
    
    
    19Signatures
    
    
    
    
    20
 2




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ORBIT/FR, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 September 30,
    
    
    December 31,2009
    
    
    2008UnauditedASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,272
    
    
    $
    1,521Accounts receivable, less allowance of
$62 in 2009 and $45 in 2008, respectively
    
    
    6,188
    
    
    
    7,660Inventory
    
    
    2,572
    
    
    
    2,353Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    2,544
    
    
    
    1,445Income tax refunds receivable
    
    
    265
    
    
    
    440Deferred income taxes
    
    
    1,071
    
    
    
    1,011Other
    
    
    706
    
    
    
    299Total current assets
    
    
    14,618
    
    
    
    14,729Property and equipment, net
    
    
    2,060
    
    
    
    1,319Deferred income taxes
    
    
    267
    
    
    
    327Cost in excess of net assets acquired
    
    
    301
    
    
    
    301Total assets
    
    $
    17,246
    
    
    $
    16,676LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,111
    
    
    $
    2,174Accounts payableCurrent and Former Parent
    
    
    1,180
    
    
    
    95Accrued expenses
    
    
    2,672
    
    
    
    3,364Short term bank financing
    
    
    450
    
    
    
    1,467Customer advances
    
    
    129
    
    
    
    675Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    2,985
    
    
    
    2,070Deferred income taxes
    
    
    124
    
    
    
    124Total liabilities, all current
    
    
    10,651
    
    
    
    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
    
    
    16,459
    
    
    
    16,383Accumulated deficit
    
    
    (9,682
    )
    
    
    (9,494
    )Treasury stock82,900 shares
    
    
    (243
    )
    
    
    (243
    )Total stockholders equity
    
    
    6,595
    
    
    
    6,707Total liabilities and stockholders equity
    
    $
    17,246
    
    
    $
    16,676
  3




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ORBIT/FR, Inc.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Contract revenues
    
    $
    7,755
    
    
    $
    5,973
    
    
    $
    20,705
    
    
    $
    17,314Cost of revenues
    
    
    4,983
    
    
    
    4,035
    
    
    
    13,902
    
    
    
    12,878Gross profit
    
    
    2,772
    
    
    
    1,938
    
    
    
    6,803
    
    
    
    4,436Operating expenses:General and administrative:Microwave Vision Group
    
    
    196
    
    
    
    
    
    
    
    587
    
    
    
    Other
    
    
    865
    
    
    
    625
    
    
    
    2,103
    
    
    
    2,092Sales and marketing:Microwave Vision Group
    
    
    121
    
    
    
    
    
    
    
    365
    
    
    
    Other
    
    
    791
    
    
    
    868
    
    
    
    2,615
    
    
    
    2,646Research and development
    
    
    312
    
    
    
    584
    
    
    
    1,024
    
    
    
    1,586Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    Total operating expenses
    
    
    2,285
    
    
    
    2,077
    
    
    
    6,848
    
    
    
    6,324Operating income (loss)
    
    
    487
    
    
    
    (139
    )
    
    
    (45
    )
    
    
    (1,888
    )Compensation charge coincident
to change in control
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (969
    )Other (loss), net
    
    
    (21
    )
    
    
    (91
    )
    
    
    (143
    )
    
    
    (209
    )Income (loss) before income taxes
    
    
    466
    
    
    
    (230
    )
    
    
    (188
    )
    
    
    (3,066
    )Income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (66
    )Net income (loss)
    
    $
    466
    
    
    $
    (230
    )
    
    $
    (188
    )
    
    $
    (3,000
    )Basic income (loss) per share
    
    $
    0.08
    
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.50
    )Diluted income (loss) per share
    
    $
    0.08
    
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.50
    )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




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ORBIT/FR, Inc.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 Nine months endedSeptember 30,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (188
    )
    
    $
    (3,000
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    284
    
    
    
    269Loss on disposal of fixed assets
    
    
    53
    
    
    
    Deferred income tax benefit
    
    
    
    
    
    
    (75
    )Non-cash compensation
    
    
    
    
    
    
    969Stock based compensation
    
    
    76
    
    
    
    111Changes in operating assets and liabilities:Accounts receivable
    
    
    1,472
    
    
    
    2,120Inventory
    
    
    (219
    )
    
    
    39Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    (1,099
    )
    
    
    (2,126
    )Income tax refunds receivable
    
    
    175
    
    
    
    (104
    )Other current assets
    
    
    (407
    )
    
    
    (66
    )Accounts payable and accrued expenses
    
    
    245
    
    
    
    (36
    )Accounts payableCurrent and Former Parent
    
    
    1,085
    
    
    
    (639
    )Customer advances
    
    
    (546
    )
    
    
    (495
    )Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    915
    
    
    
    117Net cash provided by (used in) operating activities
    
    
    1,846
    
    
    
    (2,916
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (1,078
    )
    
    
    (192
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    71Net cash used in investing activities
    
    
    (1,078
    )
    
    
    (121
    )Cash flows from financing activities:Proceeds from short term notes payable
    
    
    800
    
    
    
    1,758Repayment of short term notes payable
    
    
    (1,817
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (1,017
    )
    
    
    1,758Net (decrease) in cash and cash equivalents
    
    
    (249
    )
    
    
    (1,279
    )Cash and cash equivalents at beginning of period
    
    
    1,521
    
    
    
    2,214Cash and cash equivalents at end of period
    
    $
    1,272
    
    
    $
    935Supplemental disclosures of cash flow information:Cash (received) paid during the period for income taxes
    
    $
    (168
    )
    
    $
    342Cash paid during the period for interest
    
    $
    12
    
    
    $
    37
  5




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 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




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2009
(Amounts in thousands, except share and per share data)
 3. Inventory
  Parts and components
    
    $
    2,145Work  process
    
    
    427$
    2,572
 4. Property and Equipment
  Lab and computer equipment
    
    $
    2,695Office equipment
    
    
    359Transportation equipment
    
    
    45Furniture and fixtures
    
    
    10Fixed assets in progress
    
    
    286Leasehold improvements
    
    
    4203,815Less accumulated depreciation
    
    
    1,755Property and equipment, net
    
    $
    2,060
 7




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2009
(Amounts in thousands, except share and per share data)
 5. Accrued Expenses
  Contract costs
    
    $
    27Compensation
    
    
    1,364Commissions
    
    
    323Royalties
    
    
    58Warranty
    
    
    428Customer advances and deferred revenue
    
    
    107Other accruals
    
    
    365$
    2,672
 6. Long-Term Contracts
  Accumulated expenditures on uncompleted contracts
    
    $
    38,880Estimated earnings thereon
    
    
    10,620Total
    
    
    49,500Less: applicable progress billings
    
    
    49,941Total
    
    $
    (441
    )
  Costs and estimated earnings on uncompleted
contracts in excess of billings
    
    $
    2,544Billings on uncompleted contracts in excess of
costs and estimated earnings
    
    
    (2,985
    )Total
    
    $
    (441
    )
 8




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




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2009
(Amounts in thousands, except share and per share data)
 8. Related Party Transactions (continued)
  9. Segment and Geographic Information
  Three months ended September 30, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    3,482
    
    
    $
    2,588
    
    
    
    $1,685
    
    
    
    $7,755Cost of revenues from unaffiliated customers
    
    
    2,122
    
    
    
    1,703
    
    
    
    1,158
    
    
    
    4,983Gross profit from unaffiliated customers
    
    $
    1,360
    
    
    $
    885
    
    
    
    $527
    
    
    
    $2,772
 Three months ended September 30, 2008
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    2,699
    
    
    $
    1,312
    
    
    $
    1,962
    
    
    $
    5,973Cost of revenues from unaffiliated customers
    
    
    1,676
    
    
    
    952
    
    
    
    1,407
    
    
    
    4,035Gross profit from unaffiliated customers
    
    $
    1,023
    
    
    $
    360
    
    
    $
    555
    
    
    $
    1,938
 10




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ORBIT/FR, Inc.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2009
(Amounts in thousands, except share and per share data)
 Nine months ended September 30, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    9,717
    
    
    $
    5,983
    
    
    $
    5,005
    
    
    $
    20,705Cost of revenues from unaffiliated customers
    
    
    6,408
    
    
    
    4,041
    
    
    
    3,453
    
    
    
    13,902Gross profit from unaffiliated customers
    
    $
    3,309
    
    
    $
    1,942
    
    
    $
    1,552
    
    
    $
    6,803
 Nine months ended September 30, 2008
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalRevenues from unaffiliated customers
    
    $
    9,112
    
    
    $
    3,676
    
    
    $
    4,526
    
    
    $
    17,314Cost of revenues from unaffiliated customers
    
    
    6,167
    
    
    
    2,790
    
    
    
    3,921
    
    
    
    12,878Gross profit from unaffiliated customers
    
    $
    2,945
    
    
    $
    886
    
    
    $
    605
    
    
    $
    4,436
  11




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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
  12




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Accounts Receivable
  Results of Operations
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2009
    
    2008
    
    2009
    
    2008(Unaudited)
    
    (Unaudited)Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    35.8
    
    
    
    32.4
    
    
    
    32.9
    
    
    
    25.6General and
administrative
    
    
    11.2
    
    
    
    10.4
    
    
    
    10.1
    
    
    
    12.2Sales and marketing
    
    
    10.2
    
    
    
    14.5
    
    
    
    12.6
    
    
    
    15.3Research and development
    
    
    4.0
    
    
    
    9.8
    
    
    
    4.9
    
    
    
    9.2Microwave Vision Group
corporate expenses
    
    
    4.1
    
    
    
    
    
    
    
    4.6
    
    
    
    Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    Operating income (loss)
    
    
    6.3
    
    
    
    (2.3
    )
    
    
    (0.2
    )
    
    
    (10.9
    )Compensation charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.6
    )Income (loss) before income taxes
    
    
    6.0
    
    
    
    (2.3
    )
    
    
    (0.9
    )
    
    
    (17.7
    )Net income (loss)
    
    
    6.0
    
    
    
    (2.3
    )
    
    
    (0.9
    )
    
    
    (17.3
    )
 Three months ended September 30, 2009 compared to three months ended September 30, 2008.
 Revenues.
 Cost of revenues.
 13




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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.
 Other (loss)/income, net.
 Income taxes.
 14




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Nine months ended September 30, 2009 compared to nine months ended September 30, 2008.
 Revenues.
 Cost of revenues.
 General and administrative expenses-Microwave Vision Group.
 General and administrative expenses-other.
 Sales and marketing-Microwave Vision Group.
 Sales and marketing expenses-other.
 15




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Research and development expenses.
 Loss on disposal of assets.
 Compensation charge
 Other (loss)/income net,
 Income taxes.
 Liquidity and Capital Resources
  16




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Inflation and Seasonality
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
  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
 17




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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
September 30, 2009. Based on this evaluation, the Companys Chief Executive Officer and
Chief Financial Officer previously concluded that as of September 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 September 30, 2009 that have materially affected,
or are reasonably likely to materially affect, the Companys internal control over
financial reporting.
 18




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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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, Per Iversen,
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, 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




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