<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 MARCH 31, 2002

                                       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.)

    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  [ ]

         There were 6,084,473 shares of common stock, $.01 par value,
outstanding as of May 15, 2002.
<PAGE>
                                 ORBIT/FR, INC.

                                      INDEX

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

            Item 1.  Consolidated Financial Statements

                     Consolidated Balance Sheets -- March 31, 2002
                       (Unaudited) and December 31, 2001........................         3

                     Consolidated Statements of Operations-- Three months
                       ended March 31, 2002 and 2001 (Unaudited)................         4

                     Consolidated Statements of Cash Flows-- Three months
                       ended March 31, 2002 and 2001 (Unaudited)................         5

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

            Item 2.  Management's Discussion and Analysis of Financial
                       Condition and Results of Operations......................        11

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

PART II.    Other Information

            Item 1.  Legal Proceedings..........................................        14

            Item 2.  Changes in Securities and Use of  Proceeds.................        14

            Item 3.  Defaults upon Senior Securities............................        14

            Item 4.  Submission of Matters to a Vote of Security Holders........        14

            Item 5.  Other Information..........................................        14

            Item 6.  Exhibits and Reports on Form 8-K...........................        14

Signatures......................................................................        15
</TABLE>


                                                                               2
<PAGE>
                                 ORBIT/FR, INC.
                           CONSOLIDATED BALANCE SHEETS
                    (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                MARCH 31,    DECEMBER 31,
                                                                  2002          2001
                                                                  ----          ----
                                                               (UNAUDITED)
<S>                                                            <C>            <C>
                                     ASSETS

Current assets:
   Cash and cash equivalents                                    $  4,359       $  4,413
   Accounts receivable, less allowance of $482 and $427
     in 2002 and 2001, respectively                                3,832          5,079
   Inventory                                                       1,233          1,600
   Costs and estimated earnings in excess of billings
     on uncompleted contracts                                      1,038            477
   Deferred income taxes                                              78             64
   Other                                                             312            169
                                                                --------       --------
Total current assets                                              10,852         11,802

Property and equipment, net                                        1,257          1,329
Deferred income taxes                                                214            217
Cost in excess of net assets acquired                                381            682
Other                                                                 84             96
                                                                --------       --------

Total assets                                                    $ 12,788       $ 14,126
                                                                ========       ========



                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
   Accounts payable                                             $    989       $    794
   Accounts payable--Parent                                          469            699
   Accrued expenses                                                1,872          2,048
   Customer advances                                                 338            727
   Income taxes payable                                               24             12
   Billings in excess of costs and estimated earnings
     on uncompleted contracts                                        514            417
   Deferred income taxes                                              68             68
                                                                --------       --------
Total liabilities, all current                                     4,274          4,765

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 and outstanding--6,084,473                                61             61
  Additional paid-in capital                                      15,173         15,173
  Accumulated deficit                                             (6,477)        (5,630)
  Treasury stock -- 82,900 shares                                   (243)          (243)
                                                                --------       --------
Total stockholders' equity                                         8,514          9,361
                                                                --------       --------

Total liabilities and stockholders' equity                      $ 12,788       $ 14,126
                                                                ========       ========
</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 MARCH 31,
                                                            2002              2001
                                                            ----              ----
<S>                                                      <C>               <C>
Contract revenues                                        $     3,833       $     4,903

Cost of revenues                                               2,835             3,482
                                                         -----------       -----------

Gross profit                                                     998             1,421

Operating expenses:

   General and administrative                                    674               634

   Sales and marketing                                           521               498

   Research and development                                      265               160
                                                         -----------       -----------

Total operating expenses                                       1,460             1,292
                                                         -----------       -----------

Operating income (loss)                                         (462)              129

Other income, net                                                  2                39
                                                         -----------       -----------

Income (loss) before income taxes and cumulative

   effect of change in accounting principle                     (460)              168

Income tax expense                                                86               160
                                                         -----------       -----------

Net income (loss) before cumulative effect of

   change in accounting principle                               (546)                8

Cumulative effect of change in accounting principle             (301)               --
                                                         -----------       -----------

Net income (loss)                                        $      (847)      $         8
                                                         ===========       ===========

Basic and diluted net income (loss) per share

   before cumulative effect of change in

   accounting principle                                  $     (0.09)      $      0.00

Cumulative effect of change in accounting principle            (0.05)               --
                                                         -----------       -----------

Basic and diluted net income (loss) per share            $     (0.14)      $      0.00
                                                         ===========       ===========

Weighted average number
  common shares - basic and diluted                        6,001,573         6,022,000
                                                         ===========       ===========
</TABLE>


                             See accompanying notes.


                                                                               4
<PAGE>
                                 ORBIT/FR, INC.

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                      MARCH 31,
                                                                 2002          2001
                                                               -------       -------
<S>                                                            <C>           <C>
Cash flows from operating activities:
Net income (loss)                                              $  (847)      $     8
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
      Depreciation                                                 108           106
      Amortization                                                  --            36
      Cumulative effect of change in accounting principle          301            --
      Deferred income tax (expense) benefit                        (11)            6
      Changes in operating assets and liabilities:
         Accounts receivable                                     1,247           421
         Inventory                                                 367           (37)
         Costs and estimated earnings in excess of
            billings on uncompleted contracts                     (561)           87
         Other assets                                             (131)          (84)
         Accounts payable and accrued expenses                      19           299
         Accounts payable--Parent                                 (230)         (133)
         Income taxes payable                                       12            (4)
         Customer advances                                        (389)          445
         Billings in excess of costs and estimated
            earnings on uncompleted contracts                       97          (836)
                                                               -------       -------

Net cash provided by (used in) operating activities                (18)          314

Cash flows from investing activities:
      Purchase of property and equipment                           (36)         (160)
      Increase in software development costs                        --           (48)
                                                               -------       -------

Net cash used in investing activities                              (36)         (208)

Net increase (decrease) in cash and cash equivalents               (54)          106
Cash and cash equivalents at beginning of period                 4,413         5,868
                                                               -------       -------
Cash and cash equivalents at end of period                     $ 4,359       $ 5,974
                                                               =======       =======

Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes                   $    61       $   110
                                                               =======       =======
</TABLE>

                             See accompanying notes.


                                                                               5
<PAGE>
                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2002
             (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 months ended March 31, 2002 and 2001 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, 2002. 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 Forms 10-K and Proxy Statement for the period ended December 31, 2001,
filed on April 1, 2002 and April 30, 2002, respectively, with the Securities and
Exchange Commission, which included the consolidated financial statements and
footnotes for the year ended December 31, 2001.

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)
                                 MARCH 31, 2002
             (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 months ended March 31, 2002 and 2001 because the effect of these
securities is antidilutive.

3. ADOPTION OF NEW ACCOUNTING STANDARD REGARDING GOODWILL AND OTHER INTANGIBLE
   ASSETS

         Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS No. 142"), was issued in July 2001 and became
effective for the Company on January 1, 2002. SFAS No. 142 addresses how
goodwill and other intangible assets should be accounted for upon their
acquisition and afterwards. The primary impact of SFAS No. 142 on the Company is
that existing goodwill ("cost in excess of net assets acquired") is no longer
amortized beginning in 2002. Instead of amortization, goodwill is subject to an
assessment for impairment on a reporting unit basis by applying a
fair-value-based test annually, and more frequently if circumstances indicate a
possible impairment. If a reporting unit's net book value is more than its fair
value and the reporting unit's net book value of its goodwill exceeds the fair
value of that goodwill, an impairment loss is recognized in an amount equal to
the excess goodwill net book value.

         Based on the December 31, 2001 cost in excess of net assets acquired
balance, the Company will report lower amortization of goodwill and higher
operating profit of approximately $43 for the full year 2002 compared to the
full year 2001. The Company tested the goodwill of AEMI for impairment during
the first quarter of 2002 using a present value of future cash flows valuation
method. This process resulted in an impairment of $301 which is accounted for as
a cumulative effect of a change in accounting principle during the three months
ended march 31, 2002.

         Had the Company accounted for goodwill in accordance with SFAS No. 142
in 2001, net income and earnings per share for the three months ended March 30,
2002 and March 31, 2001 would have been as follows:


<TABLE>
<CAPTION>
                                        2002           2001
                                      --------       --------
<S>                                   <C>            <C>
Reported net income (loss)            $   (847)      $      8
Add back: Goodwill amortization             --             43
                                      --------       --------
Adjusted net income (loss)            $   (847)      $     51
                                      ========       ========


Basic earnings (loss) per share:
Reported net income (loss)            $  (0.14)      $   0.00
Add back: Goodwill amortization             --           0.01
                                      --------       --------
Adjusted net income (loss)            $  (0.14)      $   0.01
                                      ========       ========
</TABLE>


                                                                               7
<PAGE>
                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2002
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


4. INVENTORY

         Inventory consisted of the following:

<TABLE>
<CAPTION>
                          MARCH 31,     DECEMBER 31,
                            2002           2001
                            ----           ----
                         (UNAUDITED)
<S>                      <C>            <C>
Work-in-process           $     560      $     763
Parts and components            673            837
                          ---------      ---------
                          $   1,233      $   1,600
                          =========      =========
</TABLE>

5. PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                   MARCH 31,     DECEMBER 31,
                                     2002           2001
                                     ----           ----
                                  (UNAUDITED)
<S>                               <C>            <C>
Lab and computer equipment         $   1,870      $   1,856
Office equipment                       1,064          1,042
Transportation equipment                 314            314
Furniture and fixtures                    45             45
Leasehold improvements                   317            317
                                   ---------      ---------
                                       3,610          3,574
Less accumulated depreciation          2,353          2,245
                                   ---------      ---------
Property and equipment, net        $   1,257      $   1,329
                                   =========      =========
</TABLE>

6. ACCRUED EXPENSES

         Accrued expenses consists of the following:

<TABLE>
<CAPTION>
                            MARCH 31,     DECEMBER 31,
                              2002           2001
                              ----           ----
                           (UNAUDITED)
<S>                        <C>            <C>
Accrued contract costs      $     478      $     537
Accrued compensation              738            740
Accrued commissions                53            116
Accrued royalties                 100            119
Accrued warranty                  284            281
Other accruals                    219            255
                            ---------      ---------
                            $   1,872      $   2,048
                            =========      =========
</TABLE>


                                                                               8
<PAGE>
                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2002
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


7. LONG-TERM CONTRACTS

<TABLE>
<CAPTION>
                                                      MARCH 31,   DECEMBER 31,
                                                         2002         2001
                                                       -------      -------
                                                     (UNAUDITED)
<S>                                                  <C>          <C>
Accumulated expenditures on uncompleted contracts      $13,642      $12,687
Estimated earnings thereon                               1,382        1,087
                                                       -------      -------
                                                        15,024       13,774
Less: applicable progress billings                      14,500       13,714
                                                       -------      -------
   Total                                               $   524      $    60
                                                       =======      =======
</TABLE>


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

<TABLE>
<CAPTION>
                                                        MARCH 31,     DECEMBER 31,
                                                          2002            2001
                                                          ----            ----
                                                       (UNAUDITED)
<S>                                                    <C>             <C>
Costs and estimated earnings in excess of billings
  on uncompleted contracts                              $   1,038       $     477
Billings in excess of costs and estimated earnings
  on uncompleted contracts                                   (514)           (417)
                                                        ---------       ---------
                                                        $     524       $      60
                                                        =========       =========
</TABLE>

8. 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 $55 per year. These agreements are to be evaluated on an annual basis.


                                                                               9
<PAGE>
                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2002
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


9. 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 months ended March 31, 2002 and 2001.

<TABLE>
<CAPTION>
Three months ended March 31, 2002                  North America       Europe          Asia           Total
---------------------------------                  -------------       ------          ----           -----
<S>                                                <C>                <C>            <C>            <C>
     Sales to unaffiliated customers                 $   1,149        $     942      $   1,742      $   3,833
     Cost of sales to unaffiliated customers               864              882          1,089          2,835
                                                     ---------        ---------      ---------      ---------
     Gross profit from unaffiliated customers        $     285        $      60      $     653      $     998
                                                     =========        =========      =========      =========


Three months ended March 31, 2001
---------------------------------

     Sales to unaffiliated customers                 $   2,054        $   1,265      $   1,584      $   4,903
     Cost of sales to unaffiliated customers             1,500              934          1,048          3,482
                                                     ---------        ---------      ---------      ---------
     Gross profit from unaffiliated customers        $     554        $     331      $     536      $   1,421
                                                     =========        =========      =========      =========
</TABLE>


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


                                                                              10
<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 most
recent 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).


RESULTS OF OPERATIONS

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



<TABLE>
<CAPTION>
                                    THREE-MONTHS ENDED MARCH 31,
                                    ----------------------------
                                     2002                  2001
                                     ----                  ----
<S>                                 <C>                   <C>
Revenues                            100.0%                100.0%
Gross profit                         26.0                  29.0
General and administrative           17.6                  12.9
Sales and marketing                  13.6                  10.2
Research and development              6.9                   3.3
Operating income (loss)             (12.0)                  2.6
Loss before income
      tax expense                   (12.0)                  3.4
Net income (loss)                   (22.1)                  0.2
</TABLE>


THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001.

         Revenues. Revenues for the three months ended March 31, 2002 were
approximately $3.8 million compared to approximately $4.9 million for the three
months ended March 31, 2001, a decrease of approximately $1.1 million or 22%.
Revenues from the wireless, defense, satellite, and EMC markets decreased
approximately $771,000, $239,000, $202,000, and $190,000, respectively. Revenues
from the automotive market increased approximately $42,000. The Company recorded
revenues of approximately $289,000 in the higher education market.
Geographically, revenues from North America and Europe decreased $906,000 and
$323,000, respectively, while revenues from Asia increased approximately
$157,000 from prior year levels. The decrease in revenues related to the
wireless, defense, and satellite industries was a result of significant
completion of North American and European contracts in the three months ended
March 31, 2001, not repeated in the three months ended March 31, 2002.


                                                                              11
<PAGE>
         Cost of revenues. Cost of revenues for the three months ended March 31,
2002 were approximately $2.8 million compared to approximately $3.5 million for
the three months ended March 31, 2001. Gross margins decreased to 26.0% for the
three months ended March 31, 2002 from 29.0% for the three months ended March
31, 2001. The decreased margins are due to cost overruns on large existing
contracts and an investment in technical personnel oversees.

         General and administrative expenses. General and administrative
expenses for the three months ended March 31, 2002 were $674,000 compared to
$634,000 for the three months ended March 31, 2001, an increase of approximately
$40,000 or 6%. As a percentage of revenues, general and administrative expenses
increased to 17.6% for the three months ended March 31, 2002 from 12.9% for the
three months ended March 31, 2001.

         Sales and marketing expenses. Sales and marketing expenses for the
three months ended March 31, 2002 were $521,000 compared to $498,000 for the
three months ended March 31, 2001, an increase of approximately $23,000 or 5%.
As a percentage of revenues, sales and marketing expenses increased to 13.6% for
the three months ended March 31, 2002, from 10.2% for the three months ended
March 31, 2001.

         Research and development expenses. Research and development expenses
for the three months ended March 31, 2002 were $265,000 compared to $160,000 for
the three months ended March 31, 2001, an increase of $105,000 or 64%, due
mainly to the Company's continued expenditures on development activity focused
on new software development.

         Other income. Other income, net, for the three months ended March 31,
2002 was approximately $2,000 compared to $39,000 for the three months ended
March 31, 2001, a decrease of approximately $37,000. This decrease is primarily
a result of a decrease in the Company's interest income due to a reduction in
interest rates and cash balances available for investment

         Income taxes. Income tax expense for the three months ended March 31,
2002 was $87,000 compared to $160,000 of income tax expense for the three months
ended March 31, 2001, a decrease in expense of $73,000. Although no income tax
benefit on losses was recorded during the quarter ended March 31, 2002, the
Company's income tax expense for the three months ended March 31, 2002 reflects
income taxes recorded by its profitable foreign operations.

         Cumulative effect of a change in accounting principle. During the three
months ended March 31, 2002, the Company adopted the Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142"). Under SFAS No. 142, goodwill is no longer amortized over its estimated
useful life, but is subject to an annual fair value based assessment. This fair
value assessment resulted in an impairment of $301,000 recorded as of January 1,
2002, which is accounted for as a cumulative effect of a change in accounting
principle during the three months ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

         During recent years the Company has satisfied its working capital
requirements through cash flows from equity financing. Net operating losses
recorded in recent years have caused negative cash flows from operating
activities.

         Net cash used in operating activities during the three months ended
March 31, 2002 was $18,000, compared to $314,000 provided by operating
activities in the three months ended March 31, 2001. Although no significant
cash transaction occurred during the three months ended March 31, 2002, the
Company's net income, adjusted for non cash items, used $449,000 of operating
cash, compared to $156,000 provided by operations during the three months ended
March 31, 2001. Changes in the Company's operating assets and liabilities during
the three months ended March 31, 2002 provided $431,000 in operating cash
compared to $158,000 provided in the three months ended March 31, 2001.

         Net cash used in investing activities during the three months ended
March 31, 2002 for the purchase of property, plant and equipment was $36,000.
Net cash used in investing activities during the three months ended March 31,
2001 was $208,000, related to purchases of property and equipment was $160,000
and for the capitalization of software development costs was $48,000.


                                                                              12
<PAGE>
         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 three months ended March 31, 2002, approximately 35% 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 currency rate
exposure at March 31, 2002, we do not believe that a hypothetical 10% change in
foreign currency rates would materially adversely affect our financial position.


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<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.  CHANGES IN SECURITIES--NOT APPLICABLE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES--NOT APPLICABLE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

ITEM 5.  OTHER INFORMATION--NOT APPLICABLE

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a. EXHIBITS - None

         b. REPORTS ON FORM 8-K

                  No report on form 8-K was filed on behalf of the Registrant
                  during the period covered by this report.


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<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:     May 15, 2002
                                                By:  /s/  Israel Adan
                                      -----------------------------------------
                                        President and Chief Executive Officer


Date:    May 15, 2002
                                                 By:  /s/  Dave Lubbe
                                      -----------------------------------------
                                               Chief Financial Officer



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