<PAGE>   1
                                  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, 2001

                                       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)


                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)

                                 (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 14, 2001.







                                       1
<PAGE>   2




                                 ORBIT/FR, INC.

                                      INDEX

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

               Item 1. Consolidated Financial Statements

                       Consolidated Balance Sheets -- March 31, 2001
                         (Unaudited) and December 31, 2000 ..................   3

              Consolidated Statements of Operations-- Three months
                       ended March 31, 2001 and 2000 (Unaudited) ............   4

              Consolidated Statements of Cash Flows-- Three months
                       ended March 31, 2001 and 2000 (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  12

PART II Other Information

               Item 1. Legal Proceedings ....................................  13

               Item 2. Changes in Securities and Use of  Proceeds ...........  13

               Item 3. Defaults upon Senior Securities ......................  13

               Item 4. Submission of Matters to a Vote of Security Holders ..  13

               Item 5. Other Information ....................................  13

               Item 6. Exhibits and Reports on Form 8-K .....................  13

Signatures ..................................................................  14
</TABLE>



                                       2
<PAGE>   3




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

<TABLE>
<CAPTION>
                                                                                                        MARCH 31,       DECEMBER 31,
                                                                                                           2001            2000
                                                                                                       ----------       ----------
                                                                                                       (UNAUDITED)
<S>                                                                                                    <C>              <C>
                                     ASSETS

Current assets:
   Cash and cash equivalents                                                                             $ 5,974             $ 5,868
   Accounts receivable, less allowance of $239 and $184
     at March 31, 2001 and December 31, 2000, respectively                                                 4,151               4,572
   Inventory                                                                                               2,013               1,976
   Costs and estimated earnings in excess of billings
     on uncompleted contracts                                                                                496                 583
   Deferred income taxes                                                                                     170                 170
   Other                                                                                                     368                 284
                                                                                                         -------             -------
Total current assets                                                                                      13,172              13,453

Property and equipment, net                                                                                1,151               1,097
Deferred income taxes                                                                                        527                 520
Cost in excess of net assets acquired, less
   accumulated amortization of $160 and $150 at March 31, 2001
   and December 31, 2000, respectively                                                                       714                 724
Purchased software, less accumulated amortization of $334 and
   $317 at March 31, 2001 and December 31, 2000, respectively                                                 18                  35
Software development costs                                                                                   230                 182
Other                                                                                                        190                 199
                                                                                                         -------             -------

     Total assets                                                                                        $16,002             $16,210
                                                                                                         =======             =======
</TABLE>



<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                                                                     <C>                <C>
Current liabilities:
   Accounts payable                                                                                     $  1,132           $    742
   Accounts payable--Parent                                                                                  235                368
   Accrued expenses                                                                                        1,665              1,756
   Customer advances                                                                                         949                504
   Income taxes payable                                                                                       44                 48
   Billings in excess of costs and estimated earnings
     on uncompleted contracts                                                                                465              1,301
   Deferred income taxes                                                                                     121                108
                                                                                                        --------           --------
     Total current liabilities                                                                             4,611              4,827

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 at March 31, 2001 and
       December 31, 2000, respectively                                                                        61                 61
  Additional paid-in capital                                                                              15,173             15,173
  Accumulated deficit                                                                                     (3,626)            (3,634)
  Treasury stock--62,200 shares at March 31, 2001 and
     December 31, 2000 respectively                                                                         (217)              (217)
                                                                                                        --------           --------
     Total stockholders' equity                                                                           11,391             11,383
                                                                                                        --------           --------
     Total liabilities and stockholders' equity                                                         $ 16,002           $ 16,210
                                                                                                        ========           ========
</TABLE>


                             See accompanying notes.




                                       3
<PAGE>   4




                                 ORBIT/FR, INC.

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

<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED MARCH 31,

                                                          2001          2000
                                                      -----------   -----------
<S>                                                   <C>           <C>
Contract revenues                                     $     4,903   $     4,199

Cost of revenues                                            3,482         2,803
                                                      -----------   -----------

Gross profit                                                1,421         1,396

Operating expenses:

   General and administrative                                 634           718

   Sales and marketing                                        498           456

   Research and development                                   160           231
                                                      -----------   -----------

Total operating expenses                                    1,292         1,405
                                                      -----------   -----------

Operating income (loss)                                       129            (9)

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

Income (loss) before income taxes                             168            (7)

Income tax expense                                            160            41
                                                      -----------   -----------

Net income (loss)                                     $         8   $       (48)
                                                      ===========   ===========

Basic and diluted net income (loss) per share         $       .00   $      (.01)
                                                      ===========   ===========

Weighted average number
  common shares - basic and diluted                     6,022,000     6,012,000
                                                      ===========   ===========
</TABLE>






                             See accompanying notes.




                                       4
<PAGE>   5



                                 ORBIT/FR, INC.

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     MARCH 31,
                                                               2001            2000
                                                               ----            ----
<S>                                                          <C>            <C>
Cash flows from operating activities:
Net income (loss)                                            $     8        $   (48)
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
      Depreciation                                               106             98
      Amortization                                                36             45
      Deferred income tax (expense) benefit                        6            (24)
      Changes in operating assets and liabilities:
         Accounts receivable                                     421           (541)
         Inventory                                               (37)           (21)
         Costs and estimated earnings in excess of
            billings on uncompleted contracts                     87             79
         Other current assets                                    (84)           122
         Accounts payable and accrued expenses                   299         (1,099)
         Accounts payable--Parent                               (133)            10
         Income taxes payable                                     (4)          --
         Customer advances                                       445            399
         Billings in excess of costs and estimated
            earnings on uncompleted contracts                   (836)          (652)
                                                             -------        -------

Net cash provided by (used in) operating activities              314         (1,632)

Cash flows from investing activities:
      Purchase of property and equipment                        (160)           (67)
      Increase in software development costs                     (48)          --
                                                             -------        -------

Net cash used in investing activities                           (208)           (67)

Cash flows from financing activities:
      Issuance of common stock                                  --                5
                                                             -------        -------

Net cash provided by financing activities                       --                5
                                                             -------        -------

Net increase (decrease) in cash and cash equivalents             106         (1,694)
Cash and cash equivalents at beginning of period               5,868          7,353
                                                             -------        -------
Cash and cash equivalents at end of period                   $ 5,974        $ 5,659
                                                             =======        =======

Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes                 $   110        $    76
                                                             =======        =======
</TABLE>





                             See accompanying notes.



                                       5
<PAGE>   6




                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2001
             (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, 2001, and 2000 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, 2001. 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, 2000,
filed on March 30, 2001 and April 16, 2001, respectively, with the Securities
and Exchange Commission, which included the consolidated financial statements
and footnotes for the year ended December 31, 2000.

  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>   7

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2001
             (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, 2001 and 2000 because the effect of these
securities is antidilutive.

3. INVENTORY

     Inventory consisted of the following:


<TABLE>
<CAPTION>
                                               MARCH 31,       DECEMBER 31,
                                                 2001               2000
                                             ----------         ----------
                                             (UNAUDITED)
<S>                                         <C>                <C>
Work-in-process                                 $  707           $  797
Parts and components                             1,306            1,179
                                                ------           ------
                                                $2,013           $1,976
                                                ======           ======
</TABLE>

4. PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following:


<TABLE>
<CAPTION>
                                               MARCH 31,       DECEMBER 31,
                                                 2001               2000
                                             ----------         ----------
                                             (UNAUDITED)
<S>                                         <C>                <C>
Lab and computer equipment                     $1,620               $1,575
Office equipment                                1,074                1,067
Transportation equipment                          373                  319
Furniture and fixtures                             65                   65
Leasehold improvements                            159                  123
                                               ------               ------
                                                3,291                3,149
Less accumulated depreciation                   2,140                2,052
                                               ------               ------
Property and equipment, net                    $1,151               $1,097
                                               ======               ======
</TABLE>




                                       7
<PAGE>   8


                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2001
             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)




5. ACCRUED EXPENSES

   Accrued expenses consists of the following:
<TABLE>
<CAPTION>
                                               MARCH 31,       DECEMBER 31,
                                                 2001               2000
                                             ----------         ----------
                                             (UNAUDITED)
<S>                                         <C>                <C>
   Accrued contract costs                       $   206          $    259
   Accrued compensation                             821               688
   Accrued commissions                              136               129
   Accrued royalties                                102               118
   Accrued warranty                                 227               224
   Other accruals                                   173               338
                                                 ------            ------
                                                 $1,665            $1,756
                                                 ======            ======
</TABLE>


6. LONG-TERM CONTRACTS

<TABLE>
<CAPTION>
                                                         MARCH 31,       DECEMBER 31,
                                                           2001             2000
                                                         --------         --------
                                                       (UNAUDITED)
<S>                                                   <C>                    <C>
Accumulated expenditures on uncompleted contracts        $ 11,142          $ 12,078
Estimated earnings thereon                                    538               225
                                                         --------          --------
                                                           11,680            12,303
Less: applicable progress billings                         11,649            13,021
                                                         --------          --------
   Total                                                 $     31          $   (718)
                                                         ========          ========
</TABLE>


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

<TABLE>
<CAPTION>
                                                         MARCH 31,     DECEMBER 31,
                                                           2001           2000
                                                         --------       --------
                                                       (UNAUDITED)
<S>                                                   <C>                    <C>
Costs and estimated earnings in excess of billings
 on uncompleted contracts                                   $   496     $   583
Billings in excess of costs and estimated earnings
 on uncompleted contracts                                      (465)     (1,301)
                                                            -------     -------
                                                            $    31     $  (718)
                                                            =======     =======
</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 $55 per year. These agreements are to be evaluated on an annual basis.




                                       8
<PAGE>   9

                                 ORBIT/FR, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2001
             (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 months ended March 31, 2001 and 2000.

<TABLE>
<CAPTION>
Three months ended March 31, 2001                                          North America       Europe        Asia             Total
                                                                           -------------       ------        ----             -----
<S>                                                                        <C>               <C>             <C>              <C>
     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
                                                                              ======          ======          ======          ======


Three months ended March 31, 2000

     Sales to unaffiliated customers                                          $2,831          $  588          $  780          $4,199
     Cost of sales to unaffiliated customers                                   1,831             475             497           2,803
                                                                              ------          ------          ------          ------
     Gross profit from unaffiliated customers                                 $1,000          $  113          $  283          $1,396
                                                                              ======          ======          ======          ======
</TABLE>



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






                                       9
<PAGE>   10






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,
                                         2001                       2000
                                         ----                       ----
<S>                                      <C>                       <C>
Revenues                                 100.0%                     100.0%
Gross profit                              29.0                       33.2
General and
     administrative                       12.9                       17.1
Sales and marketing                       10.2                       10.9
Research and development                   3.3                        5.5
Operating income (loss)                    2.6                       (0.2)
Loss before income
      tax expense                          3.4                       (0.2)
Net income (loss)                          0.2                       (1.1)
</TABLE>


THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000.

     Revenues. Revenues for the three months ended March 31, 2001 were $4.9
million compared to $4.2 million for the three months ended March 31, 2000, an
increase of approximately $704,000 or 16.8%. Revenues from the wireless and
satellite markets increased approximately $1.5 million, and $247,000,
respectively, while revenues from the defense, EMC, and automotive markets
declined approximately $915,000, $119,000 and $53,000, respectively.
Geographically, revenues from Asia and Europe increased $804,000 and $677,000,
respectively, while revenues from North America declined approximately $777,000
from prior year levels. The sharp rise in Asian and European revenues is a
result of progress on large wireless contracts, while the decline in North
American revenues is a result of the near completion of large defense contracts.


                                       10
<PAGE>   11


     Cost of revenues. Cost of revenues for the three months ended March 31,
2001 were $3.5 million compared to $2.8 million for the three months ended March
31, 2000. Gross margins decreased to 29.0% for the three months ended March 31,
2001 from 33.2% for the three months ended March 31, 2000. The decreased margins
are due to the unusually high year 2000 margins resulting from low dependence on
outside contractors and suppliers during the three months ended March 31, 2000.

     General and administrative expenses. General and administrative expenses
for the three months ended March 31, 2001 were $634,000 compared to $718,000 for
the three months ended March 31, 2000, a decrease of approximately $84,000 or
11.7%. As a percentage of revenues, general and administrative expenses
decreased to 12.9% for the three months ended March 31, 2001 from 17.1% for the
three months ended March 31, 2000. The reduction in general and administrative
expenses over prior year levels is principally a result of reductions in senior
management personnel.

     Sales and marketing expenses. Sales and marketing expenses for the three
months ended March 31, 2001 were $498,000 compared to $456,000 for the three
months ended March 31, 2000, an increase of approximately $42,000 or 9.2%. As a
percentage of revenues, sales and marketing expenses decreased to 10.2% for the
three months ended March 31, 2001, from 10.9% for the three months ended March
31, 2000. The increase in sales and marketing expenses over prior year levels is
a result of increased commissions expense on increased contract revenues, and
additional investment in the Company's North American sales rep network.

     Research and development expenses. Research and development expenses for
the three months ended March 31, 2001 were $160,000 compared to $231,000 for the
three months ended March 31, 2000, a decrease of $71,000 or 30.7%. The decrease
was due to the capitalization software development costs in connection with the
development of the Company's 959+ Nearfield software package.

     Other income. Other income, net, for the three months ended March 31, 2001
was approximately $39,000 compared to $2,000 for the three months ended March
31, 2000, an increase of approximately $37,000. This increase reflects Company's
interest income offset by translation gains or losses for both periods.

     Income taxes. Income tax expense for the three months ended March 31, 2001
was $160,000 compared to $41,000 of income tax expense for the three months
ended March 31, 2000, an increase in expense of $119,000. Although no income tax
benefit on losses was recorded during the quarter ended March 31, 2001, the
Company's income tax expense for the three months ended March 31, 2001 reflects
income taxes recorded by its profitable foreign operations.

LIQUIDITY AND CAPITAL RESOURCES

     During 1998, 1999, and 2000 the Company has satisfied its working capital
requirements through cash flows from equity financing. Net operating losses
recorded in the past three years have caused negative cash flows from operating
activities.

         Net cash provided by operating activities during the three months ended
March 31, 2001 was $314,000, compared to $1.6 million used in operating
activities in the three months ended March 31, 2001. The increase in cash
provided by operating activities is primarily a result of the Company's payment
of the $600,000 U.S. Customs fine during March 2000, and payment of the related
accrued legal expenses. In addition, the Company's accounts receivable, and
billings in excess of costs and estimated earnings on uncompleted contracts
provided significantly more operating cash during the three months ended March
31, 2001 compared to the three months ended March 31, 2000.


                                       11
<PAGE>   12


     Net cash used in investing activities resulted primarily from purchases of
property and equipment and the capitalization of software development costs
during the three months ended March 31, 2001 in the amount of $160,000 and
$48,000, respectively.

     Net cash provided by financing activities was $5,000 for the three months
ended March 31, 2000 was related to the exercise of common stock options. No
cash was provided by or used in financing activities during the three months
ended March 31, 2001.

     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, 2001, approximately 72% 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, 2001, we do not believe that a hypothetical 10% change in
foreign currency rates would materially adversely affect our financial position.





                                       12
<PAGE>   13



PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company is not currently subject to any additional material legal
proceedings and is not aware of any other 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.

                  The following report on Form 8-K was filed on behalf of the
                  Company subsequent to the period covered by this report.

                      On April 18, 2001, we received a letter from The Nasdaq
                      Stock Market, Inc. notifying us that our common stock has
                      failed to meet the Nasdaq National Market continued
                      listing requirement for minimum market value of public
                      float. We issued a press release on April 19, 2001,
                      announcing our receipt of the letter from The Nasdaq Stock
                      Market.




                                       13
<PAGE>   14





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 14, 2001
                                        By:  /s/  David S. Bernstein
                                    ----------------------------------------
                                      President and Chief Operating Officer


Date:    May 14, 2001
                                               By:  /s/  Dave Lubbe
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                                             Chief Financial Officer


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