UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 0-3936
Orbit International Corp.
(Exact name of small business issuer as specified in its charter)
Delaware ID # 11-1826363
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number
80 Cabot Court, Hauppauge, New York 11788
(Address of principal executive offices (Zip Code)
(631) 435-8300
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Check whether the issuer filed all documents and reports required to
be filed by Sections 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date (after giving effect to
the one for three reverse stock split effective October 4, 1999):
September 30, 2000 2,026,000
Transitional Small Business Disclosure Format(check one): Yes___ No_X_
ORBIT INTERNATIONAL CORP.
The financial information herein is unaudited. However, in the opinion
of management, such information reflects all adjustments (consisting only of
normal recurring accruals) necessary to a fair presentation of the results of
operations for the periods being reported. Additionally, it should be noted
that the accompanying condensed financial statements do not purport to
contain complete disclosures in conformity with generally accepted accounting
principles.
The results of operations for the nine months ended September 30, 2000
are not necessarily indicative of the results of operations for the full
fiscal year ending December 31, 2000.
The consolidated balance sheet as of December 31, 1999 was condensed
from the audited consolidated balance sheet appearing in the 1999 annual
report on Form 10-K.
These condensed consolidated statements should be read in conjunction
with the Company's financial statements for the fiscal year ended December
31, 1999.
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors
Orbit International Corp.
We have reviewed the accompanying consolidated balance sheet of Orbit
International Corp. and Subsidiaries as of September 30, 2000, and the
related consolidated statement of operations for the three-month and nine-
month periods then ended, and the consolidated statement of cash flows for
the nine-month period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the consolidated
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
November 1, 2000
PART I - FINANCIAL INFORMATION
ITEM - I
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2000 1999
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents............... $ 687,000 $ 2,975,000
Investments in marketable securities.... 3,000 3,000
Accounts receivable (less allowance for
doubtful accounts)..................... 2,448,000 1,391,000
Inventories ............................ 7,036,000 5,804,000
Assets held for sale, net............... - 41,000
Other current assets.................... 130,000 136,000
Deferred tax assets..................... 75,000 75,000
Total current assets.................. 10,379,000 10,425,000
Property, plant and equipment - at cost,
less accumulated depreciation and
amortization........................... 2,060,000 2,128,000
Excess of cost over the fair value of
assets acquired....................... 988,000 1,059,000
Other assets............................ 838,000 661,000
Deferred tax assets..................... 675,000 675,000
TOTAL ASSETS............................ $14,940,000 $14,948,000
See accompanying notes.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
September 30, December 31,
2000 1999
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations.. $ 853,000 $ 738,000
Accounts payable.......................... 1,874,000 1,143,000
Accrued expenses.......................... 837,000 884,000
Customer advances......................... 375,000 -
Accounts payable, accrued expenses and
reserves applicable to discontinued
operations............................... 776,000 499,000
Total current liabilities............... 4,715,000 3,264,000
Long-term obligations...................... 2,839,000 3,666,000
Accounts payable, accrued expenses and
reserves applicable to discontinued
operations, less current portion..... .... - 370,000
Total liabilities....................... 7,554,000 7,300,000
STOCKHOLDERS' EQUITY
Common stock - $.10 par value.............. 304,000 304,000
Additional paid-in capital................. 24,165,000 24,165,000
Accumulated deficit........................ (7,233,000) (6,971,000)
17,236,000 17,498,000
Treasury stock, at cost.................... (9,850,000) (9,850,000)
Total stockholders' equity.............. 7,386,000 7,648,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,940,000 $14,948,000
See accompanying notes.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
2000 1999 2000 1999
Net sales........... $ 8,933,000 $ 9,791,000 $ 2,992,000 $ 2,773,000
Cost of sales....... 5,653,000 5,897,000 1,852,000 1,611,000
Gross profit........ 3,280,000 3,894,000 1,140,000 1,162,000
Selling, general and
administrative
expenses........... 3,615,000 3,690,000 1,129,000 1,144,000
Interest expense.... 252,000 250,000 82,000 87,000
Investment and
other income, net.. ( 135,000) ( 240,000) ( 27,000) ( 77,000)
Income (loss) before
income tax (benefit) ( 452,000) 194,000 ( 44,000) 8,000
Income tax (benefit) - - - - -
Net income (loss) before
extraordinary item ( 452,000) 194,000 ( 44,000) 8,000
Extraordinary item.. 190,000 - - - -
NET INCOME (LOSS)... $ ( 262,000) $ 194,000 $ ( 44,000) $ 8,000
Net income (loss) per
common share:
Income (loss) before
extraordinary item
Basic.............$ (.22) $ .10 $ (.02) $ .00
Diluted...........$ (.22) $ .09 $ (.02) $ .00
Extraordinary item
Basic.............$ .09 $ - $ - $ -
Diluted...........$ .09 $ - $ - $ -
Net income (loss)
Basic.............$ (.13) $ .10 $ (.02) $ .00
Diluted...........$ (.13) $ .09 $ (.02) $ .00
See accompanying notes.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
Net income (loss) ......................... $ (262,000) $ 194,000
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation and amortization............... 118,000 122,000
Amortization of goodwill.................... 72,000 72,000
Forgiveness of debt .................... (190,000) -
Compensatory issuance of stock and options.. - 19,000
Change in value of marketable securities... - (21,000)
Changes in operating assets and liabilities:
Accounts receivable........................(1,057,000) 349,000
Inventories................................(1,232,000) 1,009,000
Other current assets........................ 6,000 (36,000)
Other assets................................ (192,000) (25,000)
Accounts payable............................ 731,000 146,000
Accrued expenses............................ (47,000) (595,000)
Customer advances........................... 375,000 (785,000)
Assets held for sale, net................... 41,000 39,000
Accounts payable, accrued expenses and
reserves applicable to discontinued
operations................................. (93,000) (280,000)
Payment for settlement of class action
litigation - (1,000,000)
Net cash (used in) operating activities...... (1,730,000) (792,000)
Cash flows from investing activities:
Purchases of property, plant and equipment.. (36,000) -
Purchases of marketable securities.......... - (1,966,000)
Proceeds from sales of marketable securities - - 4,421,000
Net cash provided by (used in)
provided by investing activities.......... (36,000) 2,455,000
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(continued)
Nine Months Ended
September 30,
2000 1999
Cash flows from financing activities:
Decrease in due to factor................... - (15,000)
Repayments of long-term debt................ (522,000) (433,000)
Proceeds from long-term debt................ - 500,000
Proceeds from exercise of stock options..... - 2,000
Purchase of treasury stock.................. - (48,000)
Net cash (used in) provided by financing
activities................................. (522,000) 6,000
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS............................ (2,288,000) 1,669,000
Cash and cash equivalents - January 1........ 2,975,000 438,000
CASH AND CASH EQUIVALENTS
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Note 1) - Letter of Intent to Merge with Homing, Inc.
On June 7, 2000 the Company entered into a letter of intent with
Homing, Inc. ("Homing") pursuant to which the Company and Homing agreed to
combine. On September 20, 2000, the Company and Homing entered into a
revised letter of intent. Homing is a Delaware corporation formed in 1999
and headquartered in New York with research and development operations in
Tel Aviv, Israel. Homing has developed and plans to deploy web-based
software and service architecture for personalization and management of
content across provider networks and media channels.
Under the terms of the proposed transaction, as revised, Homing will
acquire all of the shares of Orbit in exchange for shares of common stock
of Homing in a tax-free transaction. Pursuant to the letter of intent,
each shareholder of Orbit will receive one share of Homing common stock for
each share of Orbit, or an aggregate of approximately 2,000,000 shares.
Upon closing of the proposed transaction, Homing will have an aggregate of
approximately 25,300,000 shares outstanding. In addition, Orbit presently
has outstanding approximately 1,630,000 options and warrants and Homing
will have the right to grant stock options in an amount equal to 15% of the
total outstanding shares at closing. Under the terms of the proposed
transaction, senior management of the Company has agreed to advance
$500,000 to Homing which loan would be converted into 593,750 shares of
Homing common stock on closing of the proposed transaction. Closing of the
proposed transaction is subject to a number of conditions, including
negotiation, execution and delivery of definitive documentation, receipt of
a fairness opinion satisfactory to the board of directors of Orbit
indicating that the terms of the transaction are fair from a financial
point of view to the shareholders of Orbit, consummation by Homing of a
private placement of not less than $5,000,000 and satisfaction of certain
other regulatory requirements and contract conditions.
Under the terms of the revised letter of intent, either party has the
right to terminate the proposed transaction in the event the private
placement is not completed by October 15, 2000. As of November 9, 2000,
although the private placement had not yet been completed, neither party
has notified the other of its intent to terminate. However, there can be
no assurance that such notice will not be given at some future date.
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
(NOTE 2) - Reverse Stock Split:
On September 1, 1999, the Board of Directors authorized a 1 for 3
reverse stock split thereby decreasing the number of issued and outstanding
shares of the Company's stock. All per share data and numbers of common
shares have been retroactively restated to reflect this reverse stock
split.
(NOTE 3) - Income (Loss) Per Share:
The following table sets forth the computation of basic and diluted
income (loss) per common share:
Nine Months Ended Three
Months Ended
September 30, September
30,
2000 1999 2000
1999
Denominator:
Denominator for basic
income (loss) per share -
weighted-average common
shares 2,026,000 2,026,000 2,026,000
2,026,000
Effect of dilutive securities:
Employee and directors
stock options 0 17,000 0
0
Warrants 0 15,000 0
0 -
Denominator for diluted
income (loss) per share -
weighted-average common
shares and assumed
conversion 2,026,000 2,058,000 2,026,000
2,026,000
For the nine and three month periods ended September 30, 2000, the
denominator for both basic and diluted loss per common share is the
weighted-average common shares. Due to a loss recorded for those periods,
there is no effect of common share equivalents as such effect would be
antidilutive.
The numerator for basic and diluted income (loss) per share for the
nine and three months ended September 30, 2000 and September 30, 1999 is
the net income (loss) for each period.
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
(NOTE 4) - Cost of Sales:
For interim periods, the Company estimates its inventory using the
gross profit method.
(NOTE 5) - Inventories:
Inventories are comprised of the following:
September 30, December 31,
2000 1999
Raw Materials.............. $ 3,745,000 $ 2,943,000
Work-in-process............ 3,291,000 2,861,000
TOTAL $ 7,036,000 $ 5,804,000
(NOTE 6) - Business Segments:
The Company operates through two business segments. Its Electronics
Segment, through the Orbit Instrument Division, is engaged in the design,
manufacture and sale of customized electronic components and subsystems. Its
Power Units Segment, through the Behlman Electronics, Inc. subsidiary, is
engaged in the design, manufacture and sale of distortion free commercial
power units, power conversion devices and electronic devices for measurement
and display.
The Company's reportable segments are business units that offer
different products. The reportable segments are each managed separately as
they manufacture and distribute distinct products with different production
processes.
(continued)
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(continued)
The following is the Company's business segment information for the nine
and three month periods ended September 30, 2000 and 1999.
Nine Months Ended Three Months
Ended
September 30, September 30,
2000 1999 2000
1999
Net sales:
Electronics........ $ 4,390,000 $ 5,763,000 $ 1,525,000
$1,561,000
Power Units........
Domestic......... 3,834,000 3,453,000 1,267,000 1,046,000
Foreign.......... 709,000 585,000 200,000 166,000
Intercompany sale - (10,000) - - -
Total Power Units... 4,543,000 4,028,000 1,467,000 1,212,000
Total $ 8,933,000 $ 9,791,000 $ 2,992,000
$2,773,000
Income (loss) from
operations:
Electronics......... $ 222,000 $ 1,092,000 $ 164,000 $
263,000
Power Units......... (142,000) (349,000) 6,000
(113,000)
General corporate
expenses not
allocated ........ (415,000) (539,000) (159,000)
(132,000)
Interest expense....... (252,000) (250,000) (82,000)
(87,000)
Investment and other
income............... 135,000 240,000 27,000
77,000
Income (loss) before
income taxes and
extraordinary item $ (452,000) $ 194,000 $ (44,000) $
8,000
(NOTE 7) - Debt:
Pursuant to the terms of an agreement with its primary lender,
the Company must comply with, among other matters, certain financial
covenants which include minimum levels of working capital, debt-to-
equity ratios, net income and tangible net worth, all as defined.
At September 30, 2000, the Company was in default of two financial
covenants which were waived by the bank.
Item 2.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS
Results of Operations
Three month period ended September 30, 2000 v. September 30, 1999
The Company currently operates in two industry segments. Its
Orbit Instrument Division is engaged in the design and manufacture of
electronic components and subsystems (the "Electronics Segment"). Its
Behlman subsidiary is engaged in the design and manufacture of
commercial power units (the "Power Units Segment").
Consolidated net sales for the three month period ended September
30, 2000 increased to $2,992,000 from $2,773,000 for the three month
period ended September 30, 1999 principally due to higher sales
recorded from the Company's Power Units Segment which were partially
offset by slightly lower sales from its Electronics Segment.
Gross profit, as a percentage of sales, for the three month period
ended September 30, 2000 decreased to 38.1% from 41.9% for the three
month period ended September 30, 1999. The decrease in gross
profit, as a percentage of sales, was due to a decrease in gross
profit realized by the Electronics Segment which was offset by a
slightly higher gross profit realized by the Power Unit Segment. The
decrease in gross profit realized by the Electronics Segment was
partially due to the shipment of initial production and prototype
units delivered during the period.
Selling, general and administrative expenses for the three month
period ended September 30, 2000 decreased to $1,129,000 from
$1,144,000 for the three month period ended September 30, 1999
principally due to slightly lower corporate expenses incurred during
the period. Selling, general and administrative expenses, as a
percentage of sales, for the three month period ended September 30,
2000 decreased to 37.7% from 41.3% for the three month period ended
September 30, 1999 principally due to increased sales during the
current period.
Interest expense for the three month period ended September 30, 2000
decreased to $82,000 from $87,000 for the three month period ended
September 30, 1999 principally due to lower amounts borrowed during
the current period which was slightly offset by higher borrowing
rates.
Investment and other income for the three month period ended
September 30, 2000 decreased to $27,000 from $77,000 for the three
month period ended September 30, 1999 principally due to a decrease
in funds available for investment during the current period.
The net loss before extraordinary item for the three month period
ended September 30, 2000 was $44,000 compared to net income of
$8,000 recorded for the three month period ended September 30, 1999.
This loss was principally due to a lower gross profit realized for
the period despite higher sales and to a decrease in investment and
other income during the period.
The net loss for the three month period ended September 30, 2000 was
$44,000 compared to income of $8,000 for the three month period
ended September 30, 1999.
Nine month period ended September 30, 2000 v. September 30, 1999
Consolidated net sales for the nine month period ended
September 30, 2000 decreased to $8,933,000 from $9,791,000 for the
nine month period ended September 30, 1999 principally due to lower
sales recorded from the Company's Electronics Segment that was
partially offset by higher sales recorded by its Power Units
Segment.
Gross profit, as a percentage of sales, for the nine month
period ended September 30, 2000 decreased to 36.7% from 39.8% for
the nine month period ended September 30, 1999 due to a lower gross
profit realized by the Electronics Segment principally due to a
reduction in that Segment's sales. This decrease was partially
offset by a higher gross profit realized by the Company's Power
Units Segment.
Selling, general and administrative expenses for the nine month
period ended September 30, 2000 decreased to $3,615,000 from
$3,690,000 for the nine month period ended September 30, 1999
principally due to a reduction in certain corporate expenditures.
Selling, general and administrative expenses, as a percentage of
sales, for the nine month period ended September 30, 2000 increased
to 40.5% from 37.7% for the nine month period ended September 30,
1999 principally due to decreased sales during the current period.
Interest expense for the nine month period ended September 30,
2000 was $252,000 and did not materially change from the $250,000
recorded for the nine month period ended September 30, 1999.
Investment and other income for the nine month period ended
September 30, 2000 decreased to $135,000 from $240,000 for the nine
month period ended September 30, 1999 principally due to a decrease
in funds available for investment during the current period.
The net loss before extraordinary item for the nine month
period ended September 30, 2000 was $452,000 compared to net income
of $194,000 recorded for the nine month period ended September 30,
1999. This loss was principally due to the decrease in sales from
the Company's Electronics Segment.
In March 2000, the Company reached an agreement with the
sellers of a discontinued apparel division whereby the Company
agreed to commence making payments on a promissory note payable to
such sellers in 2000 rather than in 2002 as scheduled. The
agreement resulted in an extraordinary gain of $190,000.
The net loss for the nine month period ended September 30, 2000
was $262,000 compared to income of $194,000 for the nine month
period ended September 30, 1999.
Liquidity, Capital Resources and Inflation
Working capital decreased to $5,664,000 at September 30, 2000
compared to $7,161,000 at December 31, 1999. The ratio of current
assets to current liabilities decreased to 2.2 to 1 at September
30, 2000 from 3.2 to 1 at December 31, 1999.
Net cash flows used in operations for the nine month period
ended September 30, 2000 was $1,730,000, primarily attributable to
the net loss for the period, the non-cash flow effect of income
related to the forgiveness of debt and an increase in accounts
receivable, inventory and other assets that was partially offset by
an increase in accounts payable and customer advances. Cash flows
used in investing activities for the nine month period ended
September 30, 2000 was $36,000 which was attributable to purchases
of property, plant and equipment. Cash flows used in financing
activities for the nine month period ended September 30, 2000 was
$522,000 which was attributable to repayments of long-term debt.
All operations of the discontinued apparel companies have been
terminated. All losses and obligations of these apparel operations
have been provided for, and accordingly, the Company does not
anticipate using any significant portion of its resources towards
these discontinued apparel operations.
In August 1998, the Company closed on a new $4,000,000 credit
facility with a new lender secured by real property and other assets
of the Company. The Company used $3,500,000 of the proceeds to
replace its existing asset based lending arrangement and the
remaining $500,000 was borrowed in January 1999 to partially fund a
class action securities litigation settlement of $1,000,000. The
amount owed under this credit facility at September 30, 2000 was
approximately $2,927,000 at an interest rate of 1.75 percent above
the prime rate of interest. Pursuant to the terms of the lending
agreement, the Company must comply with certain financial covenants.
At September 30, 2000, the Company was in default of two financial
covenants which were waived by the Bank.
The Company is currently in negotiations for the sale-leaseback
of its operating facility and is also in negotiations with an asset
based lender for a loan of $1,000,000. The Company plans to use the
proceeds from the loan and the sale-leaseback to pay off the
outstanding balance under its existing credit facility with the
remainder of the proceeds used for working capital. The Company
expects the asset based lending arrangement to close in the fourth
quarter of 2000 and the sale-leaseback to close in the first quarter
of 2001.
On September 1, 1999 the Board of Directors authorized a 1 for 3
reverse stock split thereby decreasing the number of issued and
outstanding shares of the Company's stock. This reverse stock split
was approved by the shareholders on October 1, 1999 and the effective
date was October 4, 1999. All per share data and numbers of common
shares have been retroactively restated to reflect this reverse stock
split. The purpose of the reverse stock split was to put the Company
into compliance with the requirements of a small cap listing in order
to effectuate the transfer of the Company's listing from the Nasdaq
National Market to the Small Cap Market. See the Company's Report on
Form 8-K, filed October 6, 1999. In September 1998, the Company's
Board of Directors authorized a stock repurchase program for the
repurchase of up to 83,333 shares of its common stock in the open
market or in privately negotiated transactions. The Company
repurchased approximately 52,000 shares at an average price of $5.01
per share. The Company has not made any repurchases since the first
quarter of 1999.
The Company's existing capital resources, including its bank
credit facilities, and its cash flow from operations are expected to
be adequate to cover the Company's cash requirements for the
foreseeable future.
Inflation has not materially impacted the operations of the
Company.
Certain Material Trends
The Company continues to face a very difficult business
environment with continuing pressure on the Company's prices for its
sole source sales and a general reduction in the level of funding
for the defense sector. The Company continues to pursue many
business opportunities, including programs in which it has long
participated but, due to industry-wide funding and pricing
pressures, the Company has encountered delays in the awards of these
contracts. The delay in receiving these awards shifted a portion of
shipments anticipated for the year 2000 into 2001.
The Company continues to seek new contracts which require
incurring up-front design, engineering, prototype and preproduction
costs. While the Company attempts to negotiate contract awards for
reimbursement of product development, there is no assurance that
sufficient monies will be set aside by its customers, including the
United States Government, for such effort. In addition, even if the
United States Government agrees to reimburse development costs,
there is still a significant risk of cost overrun which may not be
reimbursable. Furthermore, once the Company has completed the
design and preproduction stage, there is no assurance that funding
will be provided for future production.
The Company is heavily dependent upon military spending,
particularly the Department of the Navy, as a source of revenues and
income. The U.S. Navy fleet has been significantly reduced in the
past several years thereby impacting the procurement of equipment.
Any further reductions in the level of military spending by the
United States Government and/or further reductions to the U.S. fleet
could have a negative impact on the Company's future revenues and
earnings. In addition, due to major consolidations in the defense
industry, it has become more difficult to avoid dependence on
certain customers for revenue and income. Behlman's line of
commercial products gives the Company some diversity and the Orbit
Instrument Division is beginning to introduce certain of its
products into commercial and foreign markets as well as to other
Departments of Defense.
Forward Looking Statements
Statements in this Item 2 "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere in
this document as well as statements made in press releases and oral
statements that may be made by the Company or by officers, directors
or employees of the Company acting on the Company's behalf that are
not statements of historical or current fact constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to be materially
different from the historical results or from any future results
expressed or implied by such forward-looking statements. In
addition to statements which explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with
the terms "believes", "belief", "expects", "intends", "anticipates"
or "plans" to be uncertain and forward-looking. The forward-looking
statements contained herein are also subject generally to other
risks and uncertainties that are described from time to time in the
Company's reports and registration statements filed with the
Securities and Exchange Commission.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Bankruptcy and Liquidation of Canadian Subsidiaries. In
October, 2000, the Company received a Notice of Final Dividend and
Application for Discharge of Trustee with the respect to the bankruptcy
proceedings against two of its subsidiaries, Canada Classique, Inc. and
Winnipeg Leather (1991) Inc., which operated its Canadian apparel
operation. These proceedings were commenced in March, 1997 and the
Company expects an Order of Discharge in November, 2000.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
See Note 1 to the Financial Statements included in Part I which
is hereby incorporated by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on 8-K
8-K/A filed on September 20, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ORBIT INTERNATIONAL CORP.
Registrant
Dated: November 14, 2000 /s/ Dennis Sunshine
Dennis Sunshine, President, Chief
Executive officer and Director
Dated: November 14, 2000 /s/ Mitchell Binder
Mitchell Binder, Vice President-
Finance, Chief Financial Officer
and Director
