UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from            to
 Commission File Number 0-22583
 ORBIT/FR, Inc.
 (Exact Name of Registrant as Specified in its Charter)
 DELAWARE
    
    23-2874370(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)506 Prudential Road, Horsham, PA
    
    19044(Address of principal executive offices)
    
    (Zip Code)
 (215) 674-5100
(Registrants telephone number, including area code)
 Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 o o
 þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller Reporting Company þ o þ




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ORBIT/FR, Inc.
 Index
 Page No.PART I. FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial StatementsCondensed  Consolidated Balance SheetsMarch 31, 2009
(Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations Three months
ended March 31, 2009 and 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows Three months
ended March 31, 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
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosure of Market Risk
    
    
    14Item 4
    
    Controls and procedures
    
    
    14PART II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    16Item 1A.
    
    Risk Factors
    
    
    16Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3.
    
    Defaults upon Senior Securities
    
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16Item 5.
    
    Other Information
    
    
    16Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    16Signatures
    
    
    
    
    17
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ORBIT/FR, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
 March 31,
    
    
    December 31,2009
    
    
    2008UnauditedASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,517
    
    
    $
    1,521Accounts receivable, less allowance of $45
    
    
    6,064
    
    
    
    7,660Inventory
    
    
    2,380
    
    
    
    2,353Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    
    3,064
    
    
    
    1,445Income tax refunds receivable
    
    
    414
    
    
    
    440Deferred income taxes
    
    
    1,099
    
    
    
    1,011Other
    
    
    294
    
    
    
    299Total current assets
    
    
    14,832
    
    
    
    14,729Property and equipment, net
    
    
    1,256
    
    
    
    1,319Deferred income taxes
    
    
    239
    
    
    
    327Cost in excess of net assets acquired
    
    
    301
    
    
    
    301Total assets
    
    $
    16,628
    
    
    $
    16,676LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,673
    
    
    $
    2,174Accounts payableparent
    
    
    124
    
    
    
    95Accrued expenses
    
    
    2,998
    
    
    
    3,364Short term bank financing
    
    
    160
    
    
    
    1,467Customer advances
    
    
    1,684
    
    
    
    675Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    2,079
    
    
    
    2,070Deferred income taxes
    
    
    124
    
    
    
    124Total liabilities, all current
    
    
    9,842
    
    
    
    9,969Stockholders equity:Preferred stock: $.01 par value:Authorized shares2,000,000
Issued and outstanding sharesnone
    
    
    
    
    
    
    Common stock: $.01 par value:Authorized shares10,000,000
Issued shares6,084,473
    
    
    61
    
    
    
    61Additional paid-in capital
    
    
    16,410
    
    
    
    16,383Accumulated deficit
    
    
    (9,442
    )
    
    
    (9,494
    )Treasury stock82,900 shares
    
    
    (243
    )
    
    
    (243
    )Total stockholders equity
    
    
    6,786
    
    
    
    6,707Total liabilities and stockholders equity
    
    $
    16,628
    
    
    $
    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 March 31,2009
    
    
    2008Contract revenues
    
    $
    6,350
    
    
    $
    6,049Cost of revenues
    
    
    4,460
    
    
    
    5,077Gross profit
    
    
    1,890
    
    
    
    972Operating expenses:General and administrative
    
    
    569
    
    
    
    814Sales and marketing
    
    
    913
    
    
    
    829Research and development
    
    
    335
    
    
    
    474Total operating expenses
    
    
    1,817
    
    
    
    2,117Operating income (loss)
    
    
    73
    
    
    
    (1,145
    )Other (loss), net
    
    
    (21
    )
    
    
    (46
    )Income (loss) before income taxes
    
    
    52
    
    
    
    (1,191
    )Income tax (benefit)
    
    
    
    
    
    
    (98
    )Net income (loss)
    
    $
    52
    
    
    $
    (1,093
    )Basic net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.18
    )Diluted net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.18
    )Weighted average number common shares  basic
    
    
    6,001,573
    
    
    
    6,001,573Weighted average number common shares  diluted
    
    
    6,001,573
    
    
    
    6,001,573
  4




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ORBIT/FR, Inc.
 UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
 Three months endedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    52
    
    
    $
    (1,093
    )Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:Depreciation
    
    
    73
    
    
    
    99Deferred income tax (benefit) expense
    
    
    
    
    
    
    (98
    )Stock based compensation
    
    
    27
    
    
    
    53Changes in operating assets and liabilities:Accounts receivable
    
    
    1,596
    
    
    
    3,062Inventory
    
    
    (27
    )
    
    
    504Costs and estimated earnings in excess of
billings on uncompleted contracts
    
    
    (1,619
    )
    
    
    (1,957
    )Income tax refunds receivable
    
    
    26
    
    
    
    37Other assets
    
    
    6
    
    
    
    (56
    )Accounts payable and accrued expenses
    
    
    131
    
    
    
    (690
    )Accounts payableParent and former parent
    
    
    29
    
    
    
    450Income taxes payable
    
    
    
    
    
    
    (2
    )Customer advances
    
    
    1,009
    
    
    
    (307
    )Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    9
    
    
    
    (236
    )Net cash provided by (used in) operating activities
    
    
    1,312
    
    
    
    (234
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (9
    )
    
    
    (114
    )Net cash (used in) investing activities
    
    
    (9
    )
    
    
    (114
    )Cash flows from financing activities:Repayment of short term notes payable
    
    
    (1,307
    )
    
    
    (260
    )Net cash (used in) financing activities
    
    
    (1,307
    )
    
    
    (260
    )Net decrease in cash and cash equivalents
    
    
    (4
    )
    
    
    (608
    )Cash and cash equivalents at beginning of year
    
    
    1,521
    
    
    
    2,214Cash and cash equivalents at end of period
    
    $
    1,517
    
    
    $
    1,606Supplemental disclosures of cash flow information:Net cash paid during the period for income taxes
    
    $
    11
    
    
    $
    103Net cash paid during the period for interest
    
    $
    5
    
    
    $
    5
  5




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ORBIT/FR, Inc.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2009
(Amounts in thousands, except share and per share data)
 1. Ownership and Basis of Presentation
  2. Interim Financial Information
  6




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ORBIT/FR, Inc.
 NOTES
TO  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2009
(Amounts in thousands, except share and per share data)
 3. Inventory
  Parts and components
    
    $
    2,298Work-in-process
    
    
    82$
    2,380
 4. Property and Equipment
  Lab and computer equipment
    
    $
    2,757Office equipment
    
    
    900Transportation equipment
    
    
    45Furniture and fixtures
    
    
    10Fixed assets in process
    
    
    3Leasehold improvements
    
    
    1423,857Less accumulated depreciation
    
    
    2,601Property and
equipment   net
    
    $
    1,256
 7




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ORBIT/FR, Inc.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2009
(Amounts in thousands, except share and per share data)
 5. Accrued Expenses
  Contract costs
    
    $
    217Compensation
    
    
    1,360Commissions
    
    
    331Royalties
    
    
    58Warranty
    
    
    328Customer advances and deferred revenue
    
    
    189Other accruals
    
    
    515$
    2,998
 6. Long-Term Contracts
  Accumulated expenditures on uncompleted contracts
    
    $
    30,209Estimated earnings thereon
    
    
    6,270Total
    
    
    36,479Less: applicable progress billings
    
    
    (35,494
    )Total
    
    $
    985
  Costs and estimated earnings on uncompleted
contracts in excess of billings
    
    $
    3,064Billings on uncompleted contracts in excess of
costs and estimated earnings
    
    
    (2,079
    )Total
    
    $
    985
 8




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ORBIT/FR, Inc.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2009
(Amounts in thousands, except share and per share data)
 7. Related Party Transactions
   9




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ORBIT/FR, Inc.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2009
(Amounts in thousands, except share and per share data)
 8. Segment and Geographic Information
  Three months ended March 31, 2009
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    3,150
    
    
    $
    687
    
    
    $
    2,513
    
    
    $
    6,350Cost of sales to unaffiliated customers
    
    
    2,095
    
    
    
    586
    
    
    
    1,779
    
    
    
    4,460Gross profit from unaffiliated customers
    
    $
    1,055
    
    
    $
    101
    
    
    $
    734
    
    
    $
    1,890
 Three months ended March 31, 2008
    
    North America
    
    
    Europe
    
    
    Asia
    
    
    TotalSales to unaffiliated customers
    
    $
    2,969
    
    
    $
    1,236
    
    
    $
    1,844
    
    
    $
    6,049Cost of sales to unaffiliated customers
    
    
    2,173
    
    
    
    1,114
    
    
    
    1,790
    
    
    
    5,077Gross profit from unaffiliated customers
    
    $
    796
    
    
    $
    122
    
    
    $
    54
    
    
    $
    972
  10




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




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Results of Operations
  Three-months ended March 31,2009
    
    2008(Unaudited)Revenues
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    29.8
    
    
    
    16.1General and administrative
    
    
    9.0
    
    
    
    13.5Sales and marketing
    
    
    14.4
    
    
    
    13.7Research and development
    
    
    5.3
    
    
    
    7.9Operating income (loss)
    
    
    1.1
    
    
    
    (18.9
    )Income (loss) before tax expense
    
    
    0.8
    
    
    
    (19.7
    )Net income (loss)
    
    
    0.8
    
    
    
    (18.1
    )
 Three months ended March 31, 2009 compared to three months ended March 31, 2008.
 Revenues.
 Cost of revenues.
 General and administrative expenses.
 12




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Sales and marketing expenses.
 Research and development expenses.
 Other (loss),net.
 Income taxes.
 Liquidity and Capital Resources
  13




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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 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
 14




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regarding required disclosure. The Company evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of March 31, 2009. Based on this
evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded
that, as of March 31, 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 March 31, 2009 that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial
reporting.
 15




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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.
 16




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ORBIT/FR, Inc.
 
 SIGNATURES
  Orbit/FR, Inc.
Registrant  /s/  Per IversenPresident and Chief Executive Officer  /s/  Relland WinandChief Financial Officer 17