-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K+A0l1Tx4oZJMZzZ3NTLbbdLqWqIKDzp7VPV45G0gM7jOGxLY9n1lkW3txn7nhIk 91ujK2JFnJBfuxZGjt64YA== 0000074818-07-000022.txt : 20070810 0000074818-07-000022.hdr.sgml : 20070810 20070810153219 ACCESSION NUMBER: 0000074818-07-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070810 DATE AS OF CHANGE: 20070810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORBIT INTERNATIONAL CORP CENTRAL INDEX KEY: 0000074818 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 111826363 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03936 FILM NUMBER: 071045128 BUSINESS ADDRESS: STREET 1: 80 CABOT COURT CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 7136675601 MAIL ADDRESS: STREET 1: 80 CABOT COURT CITY: HAUPPAUGE STATE: NY ZIP: 11788 FORMER COMPANY: FORMER CONFORMED NAME: ORBIT INSTRUMENT CORP DATE OF NAME CHANGE: 19911015 10-Q 1 form10-q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 2007 OR [ ] TRANSITION REPORT UNDER 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 Registrant as specified in its charter) DELAWARE 11-1826363 (State or other jurisdiction of (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 formal fiscal year, if changed since last report) Check 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 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 ___ - Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer____ Accelerated Filer____ Non-accelerated Filer X -- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes___ No X -- The number of shares outstanding of registrant's Common Stock, par value $.10, as of August 10, 2007 was 4,595,571. --------- INDEX Page No. -------- Report of Independent Registered Public Accounting Firm 3 Part I. Financial Information: Item 1 - Financial Statements: Condensed Consolidated Balance Sheet - June 30, 2007(unaudited) and December 31, 2006 4-5 Condensed Consolidated Statements of Operations (unaudited) Six and Three Months Ended June 30, 2007 and 2006 6 Condensed Consolidated Statement of Cash Flows (unaudited) Six Months Ended June 30, 2007 and 2006 7 Notes to Condensed Consolidated Financial Statements 8-13 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 14-22 Item 3 - Quantitative and Qualitative Disclosure About Market Risk 22 Item 4 - Controls and Procedures 22 Part II. Other Information: Item 4 - Submission of Matters to a Vote of Security Holders 23 Item 6 - Exhibits 23 Signatures 24 Exhibits 25-30 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Orbit International Corp. We have reviewed the accompanying condensed consolidated balance sheet of Orbit International Corp. and Subsidiaries as of June 30, 2007, and the related condensed consolidated statements of operations for the six-month and three-month periods ended June 30, 2007 and 2006 and the condensed consolidated statements of cash flows for the six-month periods ended June 30, 2007 and 2006. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above in order for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet as of December 31, 2006, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated March 27, 2007, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2006, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. GOLDSTEIN GOLUB KESSLER LLP New York, New York August 8, 2007
PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET June 30, December 31, 2007 2006 ------------- ----------- (unaudited) ASSETS - --------------- Current assets: Cash and cash equivalents $ 2,500,000 $ 3,935,000 Investments in marketable securities 4,610,000 4,062,000 Accounts receivable (less allowance for doubtful accounts) 3,559,000 3,712,000 Inventories. 10,173,000 8,992,000 Deferred tax asset 722,000 717,000 Other current assets 152,000 145,000 ------------- ----------- Total current assets 21,716,000 21,563,000 Property and equipment, net 418,000 414,000 Goodwill 6,135,000 6,135,000 Intangible assets, net 986,000 1,204,000 Deferred tax asset 1,363,000 1,333,000 Other assets 575,000 566,000 ------------- ----------- TOTAL ASSETS $ 31,193,000 $31,215,000 ============= =========== See accompanying notes.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (continued) June 30, December 31, 2007 2006 ----------- ---------------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------ Current liabilities: Current portion of long-term obligations 1,104,000 $ 1,124,000 Accounts payable 1,355,000 1,028,000 Accrued expenses 1,231,000 1,353,000 Customer advances 138,000 797,000 Deferred income. 85,000 85,000 -------------- ----------- Total current liabilities 3,913,000 4,387,000 Deferred income 385,000 427,000 Long-term obligations, net of current maturities 3,463,000 4,105,000 ------------ ----------- Total liabilities 7,761,000 8,919,000 ------------ ----------- STOCKHOLDERS' EQUITY Common stock - $.10 par value, 10,000,000 Shares authorized, 4,596,000 and 4,588,000 shares issued and outstanding at 2007 and 2006, respectively 460,000 459,000 Additional paid-in capital 19,655,000 19,536,000 Accumulated other comprehensive (loss) gain, net of tax (29,000) 5,000 Retained earnings 3,346,000 2,296,000 ------------ ----------- Total stockholders' equity 23,432,000 22,296,000 ------------ ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,193,000 $ 31,215,000 ============== ============ See accompanying notes.
ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Six Months Ended Three Months Ended June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Net sales $12,374,000 $12,739,000 $ 6,154,000 $ 6,110,000 Cost of sales 6,913,000 7,155,000 3,438,000 3,423,000 ---------- ------------ ----------- ----------- Gross profit 5,461,000 5,584,000 2,716,000 2,687,000 ----------- ----------- ---------- ---------- Selling, general and administrative expenses 4,459,000 4,201,000 2,238,000 2,055,000 Interest expense 182,000 228,000 87,000 112,000 Investment and other income, net ( 255,000) ( 151,000) (126,000) ( 84,000) --------- ---------- ----------- ---------- Income before provision for income taxes 1,075,000 1,306,000 517,000 604,000 Provision for income taxes 25,000 25,000 15,000 15,000 ---------- --------- --------- ----------- NET INCOME $ 1,050,000 $ 1,281,000 $ 502,000 $ 589,000 =========== =========== =========== =========== Net income per common share: Basic $ .24 $ .29 $ .12 $ .14 Diluted $ .23 $ .27 $ .11 $ .13 See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Six Months Ended June 30, 2007 2006 ---- ---- Cash flows from operating activities: Net income $1,050,000 $1,281,000 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Stock-based compensation expense 88,000 106,000 Amortization of intangible assets 218,000 218,000 Depreciation and amortization 61,000 69,000 Bond premium amortization 7,000 23,000 Bad debt 12,000 - Gain on sale of marketable securities (15,000) - Deferred income. (42,000) (43,000) Changes in operating assets and liabilities: Accounts receivable 141,000 120,000 Inventories (1,181,000) (115,000) Other current assets (7,000) (34,000) Other assets (9,000) 636,000 Accounts payable 327,000 254,000 Accrued expenses (122,000) (235,000) Customer advances (659,000) (226,000) --------- --------- Net cash (used in) provided by operating activities (131,000) 2,054,000 Cash flows from investing activities: Purchases of property and equipment (65,000) (98,000) Sale of marketable securities 522,000 158,000 Purchase of marketable securities (1,113,000) (2,688,000) Cash paid for direct costs relating to Tulip acquisition - (5,000) ---------- ----------- Net cash used in investing activities (656,000) (2,633,000) Cash flows from financing activities: Repayments of long-term debt (1,712,000) (563,000) Proceeds from issuance of long term debt 1,050,000 - Proceeds from exercise of stock options 14,000 15,000 ---------- ---------- Net cash used in financing activities (648,000) (548,000) NET DECREASE IN CASH AND CASH EQUIVALENTS (1,435,000) (1,127,000) Cash and cash equivalents - January 1 3,935,000 3,933,000 ---------- ---------- CASH AND CASH EQUIVALENTS - June 30 $2,500,000 $2,806,000 ========== ========== Supplemental cash flow information: Cash paid for interest $ 218,000 $ 232,000 ========== ========== See accompanying notes. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (NOTE 1) - Basis of Presentation: ------- ----------------------- The interim financial information herein is unaudited. However, in the opinion of management, such information reflects all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods being reported. Additionally, it should be noted that the accompanying condensed consolidated financial statements do not purport to contain complete disclosures required for annual financial statements in conformity with generally accepted accounting principles. The results of operations for the six and three months ended June 30, 2007, are not necessarily indicative of the results of operations for the full fiscal year ending December 31, 2007. These condensed consolidated statements should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended December 31, 2006 contained in the Company's Form 10-KSB. Effective January 1, 2006, the Company began recognizing share-based compensation under Statement of Financial Accounting Standards ("SFAS") No. 123 (R), Share Based Payment, for all awards granted after January 1, 2006 and for the unvested portion of previous award grants based on each award's grant date fair value. At June 30, 2007, the Company has various stock-based employee compensation plans. These plans provide for the granting of nonqualified and incentive stock options as well as restricted stock awards to officers, key employees and nonemployee directors. The terms and vesting schedules of stock-based awards vary by type of grant and generally, the awards vest based upon time-based conditions. Stock compensation expense was $38,000 and $88,000 for the three and six months ended June 30, 2007, respectively, and $55,000 and $106,000 for the comparable 2006 periods. The Company estimated the fair value of its stock option awards on the date of grant using the Black-Scholes valuation model. The assumptions used for stock grants issued during the following periods were as follows: Six Months Ended June 30, 2007 2006 ---- ---- Dividend Yield - - Expected Volatility 51.19% 53.86% to 55.52% Risk-free interest rate 5.02% 4.87% to 5.21% Expected life of options (in years) 3.63 5.50 Expected volatility assumptions utilized for 2007 and 2006 were based on the volatility of the Company's stock price for 3.63 and 3 years, respectively, prior to grant date. The risk-free rate is derived from the 10 year U.S. treasury yield on grant date. Expected life for 2007 was based on prior history of option activity. Expected life for 2006 was derived using the "simplified" method as allowed under the provisions of the Securities and Exchange Commission's Staff Bulletin No. 107 and represents the period of time that options are expected to be outstanding. Dividend yield is based on prior history of cash dividends declared. (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) The Company's stock-based employee compensation plans allow for the issuance of restricted stock awards that may not be sold or otherwise transferred until certain restrictions have lapsed. The unearned stock-based compensation related to restricted stock granted is being amortized to compensation expense over the vesting period. The share based expense for these awards was determined based on the market price of the Company' stock at the date of grant applied to the total number of shares that were anticipated to vest. As of June 30, 2007, the Company has unearned compensation of $1,085,000 associated with these awards. Stock option activity during the six months ended June 30, 2007, under all our stock option plans is as follows: Average Weighted Remaining Average Contractual Number of Exercise Term Shares Price (in years) ------ ----- ----------- Options outstanding, January 1, 2007 607,000 $3.03 5 Granted 4,000 9.07 10 Forfeited (1,000) 7.11 - Exercised (7,000) 1.92 - ------- ---- --- Options outstanding, June 30, 2007 (Vested and expected to vest) 603,000 $3.08 5 ======= ===== = Outstanding exercisable at June 30, 2007 599,000 $3.05 5 ======= ===== = At June 30, 2007 the aggregate intrinsic value of options outstanding and exercisable was $3,480,000. The intrinsic value of options exercised during the six months ended June 30, 2007 was approximately $49,000. The following table summarizes the Company's nonvested stock option activity for the six months ended June 30, 2007: Number of Weighted-Average Shares Grant-Date Fair Value ------ ----------------------- Nonvested stock options at beginning of year 7,000 $4.31 Granted 4,000 3.92 Vested (6,000) 4.40 Forfeited (1,000) 3.89 ------- ---- Nonvested stock options At end of year 4,000 $3.92 ===== ===== (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) At June 30, 2007, there was approximately $14,000 of unrecognized compensation cost related to the above non-vested stock options. The cost is expected to be recognized over the next twelve months. (NOTE 2) - Financing Arrangements: ------- ----------------------- In June 2007, the Company entered into an amended $3,000,000 credit facility with a commercial lender secured by accounts receivable, inventory and property and equipment. The agreement will continue from year to year thereafter unless sooner terminated for an event of default including non-compliance with financial covenants. Loans under the facility bear interest equal to the sum of 1.00% plus the one-month London Inter-bank offer rate (LIBOR) (5.32% at June 30, 2007). No amounts have been borrowed under the credit facility. In April 2005, the Company entered into a five-year $5,000,000 Term Loan Agreement with the same aforementioned lender to finance the acquisition of Tulip. The Term Loan has fifty-nine (59) monthly principal payments of approximately $60,000 and a sixtieth (60th) payment of approximately $1,500,000. In June 2007, the interest rate was amended and the loan currently bears interest equal to the sum of 1.15% plus the one-month LIBOR. The loan's unpaid balance at June 30, 2007 was approximately $3,512,000. In April 2005, the Company entered into a five year $2,000,000 Promissory Note with the selling shareholders of Tulip at an interest rate of prime (8.25% at June 30, 2007) plus 2.00%. Principal payments of $100,000 were made on a quarterly basis along with accrued interest. In June 2007, the Company refinanced the balance due on the Promissory Note of $1,050,000 with its primary commercial lender. Under the terms of the new loan, monthly payments of $35,000 will be made over a thirty-month period, commencing August 2007, along with accrued interest at a rate of 1.15% plus the one-month LIBOR. (NOTE 3) - Income Per Share: ------- ------------------ The following table sets forth the computation of basic and diluted income per common share: Six Months Ended Three Months Ended June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Denominator: Denominator for basic income per share - weighted-average common shares 4,309,000 4,348,000 4,312,000 4,349,000 Effect of dilutive securities: Employee and directors stock options 227,000 255,000 230,000 231,000 (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) Unearned portion of restricted stock awards 109,000 64,000 110,000 47,000 ------- ------ ------- ------ Denominator for diluted income per share - weighted-average common shares and assumed conversion 4,645,000 4,667,000 4,652,000 4,627,000 ========= ========= ========= ========= The numerator for basic and diluted income per share for the six and three month periods ended June 30, 2007 and 2006 is net income. Options to purchase 10,000 shares of common stock were outstanding during the three and six months ended June 30, 2007 and options to purchase 6,000 shares were outstanding for the three month period ended June 30, 2006, but were not included in the computation of diluted earnings per share. The inclusion of these options would have been anti-dilutive due to the options' exercise prices being greater than the average market price of the Company's common shares during the respective periods. Approximately 281,000 shares of common stock were outstanding during the three and six months ended June 30, 2007, but were not included in the computation of basic earnings per share. These shares were excluded because they represent the unvested portion of restricted stock awards. (NOTE 4) - Cost of Sales: ------- --------------- For interim periods, the Company estimates its inventory and related gross profit. (NOTE 5) - Inventories: - ------- ----------- Inventories are comprised of the following: June 30, December 31, 2007 2006 ---- ---- Raw Materials $ 5,900,000 $ 5,245,000 Work-in-process 3,561,000 3,138,000 Finished goods 712,000 609,000 ----------- ----------- TOTAL $10,173,000 $ 8,992,000 =========== =========== (NOTE 6) - Comprehensive Income: - ------- -------------------- For the six and three months ended June 30, 2007, total comprehensive income, net of tax was $1,016,000 and $477,000, respectively. For the comparable periods during 2006, total comprehensive income was $1,248,000 and $559,000, respectively. Comprehensive income consists of net income and unrealized gains and losses on marketable securities. (NOTE 7) - Business Segments: - -------- ----------------- The Company operates through two business segments. The Electronics Segment (or "Electronics Group") is comprised of the Orbit Instrument (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) Division and the Company's Tulip subsidiary. The Electronics Segment is engaged in the design, manufacture and sale of customized electronic components and subsystems. The Company's Power Units Segment (or "Power Group"), 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. The following is the Company's business segment information for the six and three month periods ended June 30, 2007 and 2006. Six Months Ended Three Months Ended June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Net sales: Electronics Domestic $ 7,918,000 $ 7,682,000 $ 4,017,000 $ 3,746,000 Foreign 535,000 657,000 236,000 332,000 --------- ---------- --------- ----------- Total Electronics 8,453,000 8,339,000 4,253,000 4,078,000 Power Units Domestic 3,435,000 4,118,000 1,580,000 1,864,000 Foreign 486,000 282,000 321,000 168,000 ----------- ----------- ----------- ----------- Total Power Units 3,921,000 4,400,000 1,901,000 2,032,000 ----------- ----------- ----------- ---------- Total $12,374,000 $12,739,000 $ 6,154,000 $ 6,110,000 =========== =========== =========== =========== Income from operations: Electronics $ 1,510,000 $ 1,632,000 $ 751,000 $ 817,000 Power Units 200,000 423,000 89,000 190,000 General corporate expenses not allocated (708,000) (672,000) (362,000) (375,000) Interest expense (182,000) (228,000) (87,000) (112,000) Investment and other income 255,000 151,000 126,000 84,000 ----------- ----------- ----------- ----------- Income before income taxes $ 1,075,000 $ 1,306,000 $ 517,000 $ 604,000 =========== =========== =========== ========== (NOTE 8) - Goodwill and Other Intangible Assets: - -------- ------------------------------------- The Company applies Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS 142 requires that an intangible asset with a finite life be amortized over its useful life and that goodwill and other intangible assets with indefinite lives not be amortized but evaluated for impairment. The Company concluded, as of March 31, 2007, that there was no impairment to goodwill and, pursuant to SFAS 142, goodwill is no longer being amortized. (continued) ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued) Intangible assets with finite lives are being amortized over three and five years. Amortization expense for the remainder of 2007 and for the next three years are as follows: 2007 217,000 2008 356,000 2009 330,000 2010 83,000 -------- Total $ 986,000 ========== (NOTE 9) - Income Taxes - --------- ------------- For the six and three months ended June 30, 2007 and 2006, the Company utilized net operating loss carryforwards to offset income taxes except for a provision for state income tax expense in Pennsylvania. The amount of the provision was $25,000 and $15,000, respectively, for the six and three months ended June 30, 2007. The amount of the provision was the same for the comparable periods in 2006. On January 1, 2007, the Company adopted Financial Accounting Standards Board("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - - an interpretation of FASB Statement No. 109"("FIN 48"). This interpretation provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is "more likely that not that the position is sustainable based on its technical merits. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There was no impact to the Company's consolidated financial position, results of operations or cash flows for the six and three month periods ended June 30, 2007. Item 2. ORBIT INTERNATIONAL CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview - ------------------- The Company recorded a decrease in operating results for the three and six month periods ended June 30, 2007. Revenues increased by 0.7% and the Company's gross profit margins increased for the three-month period ended June 30, 2007 compared to the prior period. Revenues decreased by 2.9% but gross margins increased for the six month period ended June 30, 2007 compared to the prior period principally due to product mix. Net income for both the three month and six month periods ended June 30, 2007 decreased compared to the prior periods. The decline in profitability in the second quarter and six month period was due to higher selling, general and administrative costs without a corresponding increase in sales. The increase in costs was attributable to higher selling costs, particularly from our Electronics Group, and higher corporate administrative costs including a $50,000 retainer paid to our investment banker to pursue strategic alternatives for the Company. Our backlog at June 30, 2007 was approximately $16,900,000 compared to $10,900,000 at June 30, 2006, an increase of approximately 55.2%. Consequently, in order to support this increase in backlog our inventory levels at June 30, 2007, are significantly higher than December 31, 2006 levels. There is no seasonality to the Company's business. However, the Company is expecting a stronger second half of 2007. Our shipping schedules are generally determined by the shipping schedules outlined in the purchase orders received from our customers. Both of our operating segments are pursuing a significant amount of business opportunities and our confidence level remains very high with respect to receiving many of the orders we are pursuing although timing is always an uncertainty. Our success of the past few years has significantly strengthened our balance sheet evidenced by our 5.5 to 1 current ratio at June 30, 2007. We currently have a $3,000,000 credit facility in place that we have not used to date and the Company is currently exploring accretive acquisition opportunities that are compatible with our existing operations. We also have several financing alternatives available to us, if needed, in order to fund any potential acquisitions. Critical Accounting Policies - ------------------------------ The discussion and analysis of the Company's financial condition and the results of its operations are based on the Company's financial statements and the data used to prepare them. The Company's financial statements have been prepared based on accounting principles generally accepted in the United States of America. On an on-going basis, we re-evaluate our judgments and estimates including those related to inventory valuation, the valuation allowance on the Company's deferred tax asset and goodwill impairment. These estimates and judgments are based on historical experience and various other assumptions that are believed to be reasonable under current business conditions and circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect more significant judgments and estimates in the preparation of the consolidated financial statements. Inventories - ----------- Inventory is valued at the lower of cost (specific, average and first-in first-out basis) or market. Inventory items are reviewed regularly for excess and obsolete inventory based on an estimated forecast of product demand. Demand for the Company's products can be forecasted based on current backlog, customer options to reorder under existing contracts, the need to retrofit older units and parts needed for general repairs. Although the Company makes every effort to insure the accuracy of its forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have an impact on the level of obsolete material in its inventory and operating results could be affected, accordingly. However, world events have forced our country into various situations of conflict whereby equipment is used and parts may be needed for repair. This could lead to increased product demand as well as the use of some older inventory items that the Company had previously determined obsolete. Deferred tax asset - -------------------- At December 31, 2006, the Company had an alternative minimum tax credit of approximately $573,000 with no limitation on the carry-forward period and federal and state net operating loss carry-forwards of approximately $22,000,000 and $7,000,000, respectively, that expire through 2025. In addition, the Company receives a tax deduction when their employees exercise their non-qualified stock options thereby increasing the Company's deferred tax asset. The Company records a valuation allowance to reduce its deferred tax asset when it is more likely than not that a portion of the amount may not be realized. The Company estimates its valuation allowance based on an estimated forecast of its future profitability. Any significant changes in future profitability resulting from variations in future revenues or expenses could affect the valuation allowance on its deferred tax asset and operating results could be affected, accordingly. Impairment of Goodwill - ------------------------ The Company has significant intangible assets related to goodwill and other acquired intangibles. In determining the recoverability of goodwill and other intangibles, assumptions must be made regarding estimated future cash flows and other factors to determine the fair value of the assets. If these estimates or their related assumptions change in the future, the company may be required to record impairment charges for those assets not previously recorded. The Company applies Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). Under the provisions of SFAS 142, the cost of certain intangible assets are no longer subject to amortization. These costs are reviewed for potential impairment on an annual basis. During the first quarter of 2007, the Company determined that there was no impairment to its goodwill and other intangible assets. Share-Based Compensation - ------------------------- Effective January 1, 2006, the Company began recognizing share-based compensation under SFAS No. 123(R), which requires the measurement at fair value and recognition of compensation expense for all share-based awards. Total share based compensation expense was $38,000 and $88,000 for the three month and six month periods ended June 30, 2007, respectively, compared to $55,000 and $106,000 from the respective prior year periods. The estimated fair value of stock options granted since January 1, 2006 were calculated using the Black-Scholes model. This model requires the use of input assumptions. These assumptions include expected volatility, expected life, expected dividend rate, and expected risk-free rate of return. Results of Operations - ----------------------- Three-month period ended June 30, 2007 v. June 30, 2006 - ---------------------------------------------------------------- The Company currently operates in two industry segments. Its Orbit Instrument Division and its Tulip subsidiary are engaged in the design, manufacture and sale of electronic components and subsystems (the "Electronics Group"). Its Behlman subsidiary is engaged in the design, manufacture and sale of commercial power units (the "Power Group"). Consolidated net sales for the three-month period ended June 30, 2007 increased by 0.7% to $6,154,000 from $6,110,000 for the three month period ended June 30, 2006 principally due to a 4.3% increase in sales from its Electronics Group that was partially offset by a 6.4% decrease in sales from the Power Group. Gross profit, as a percentage of sales, for the three months ended June 30, 2007 increased to 44.1% from 44.0% for the three-month period ended June 30, 2006. This increase resulted from a higher gross profit from the Company's Electronics Group that was offset by a lower gross profit from the Power Group. The increase in gross profit from the Electronics Group was principally due to product mix. The decrease in gross profit by the Power Group was due principally to a decrease in sales. Selling, general and administrative expenses increased by 8.9% to $2,238,000 for the three month period ended June 30, 2007 from $2,055,000 for the three month period ended June 30, 2006 principally due to higher selling costs from both the Electronics and Power Groups and higher corporate administrative costs including a $50,000 retainer paid to its investment banker to pursue strategic alternatives for the Company. Selling, general and administrative expenses, as a percentage of sales, for the three month period ended June 30, 2007 increased to 36.4% from 33.6% for the three month period ended June 30, 2006 principally due to the aforementioned increase in expenses without a commensurate increase in sales. Interest expense, for the three month period ended June 30, 2007 decreased to $87,000 compared to $112,000 the three month period ended June 30, 2006, due to a decrease in the amounts owed to lenders in the current period resulting from the pay down of debt incurred in connection with the acquisition of Tulip. Investment and other income for the three-month period ended June 30, 2007 increased to $126,000 from $84,000 for the three-month period ended June 30, 2006 principally due to an increase in amounts invested during the current period and to the increase in interest rates. Net income before income tax provision for the three month period ended June 30, 2007 decreased to $517,000 from $604,000 for the three month period ended June 30, 2006 principally due to the increase in selling, general and administrative expenses without a commensurate increase in sales and despite the decrease in interest expense and increase in investment and other income. Income taxes for the three months ended June 30, 2007 and June 30, 2006 consist of $15,000 in state income taxes that cannot be offset by any state net operating loss carry-forwards. As a result of the foregoing, net income for the three months ended June 30, 2007 was $502,000 compared to $589,000 for the three months ended June 30, 2006, a decrease of 14.8%. Earnings before interest expense, taxes, depreciation and amortization, and stock based compensation (EBITDA) for the three month period ended June 30, 2007 decreased to $781,000 from $911,000 for the three month period ended June 30, 2006. Listed below is the EBITDA reconciliation to net income: Three months ended June 30, 2007 2006 ---- ---- Net income $502,000 $589,000 Interest expense 87,000 112,000 Tax expense 15,000 15,000 Depreciation and amortization 139,000 140,000 Stock based compensation 38,000 55,000 ------ ---------- EBITDA $781,000 $911,000 Six-month period ended June 30, 2007 v. June 30, 2006 - -------------------------------------------------------------- Consolidated net sales for the six-month period ended June 30, 2007 decreased by 2.9% to $12,374,000 from $12,739,000 for the six-month period ended June 30, 2006 principally due to a 10.9% decrease in sales from its Power Group that was partially offset by a 1.4% increase in sales from its Electronics Group. Gross profit, as a percentage of sales, for the six months ended June 30, 2007 increased to 44.1% from 43.8% for the six-month period ended June 30, 2006. This increase resulted from a higher gross profit realized by the Electronics Group due principally to product mix. The gross profit realized by the Power Group did not materially change from the prior period, despite the decrease in sales and was due to product mix. Selling, general and administrative expenses increased by 6.1% to $4,459,000 for the six-month period ended June 30, 2007 from $4,201,000 for the six-month period ended June 30, 2006 principally due to higher selling costs from the Electronics Group and higher corporate administrative costs. Selling, general and administrative expenses, as a percentage of sales, for the six-month period ended June 30, 2007 increased to 36.0% from 33.0% for the six-month period ended June 30, 2006 principally due to the increase in expenses in the current period and the decrease in sales. Interest expense, for the six month period ended June 30, 2007 decreased to $182,000 compared to $228,000 for the six month period ended June 30, 2006, due to a decrease in the amounts due to lenders in the current period resulting from the pay down of debt incurred in connection with the acquisition of Tulip. Investment and other income for the six month period ended June 30, 2007 increased to $255,000 from $151,000 for the six month period ended June 30, 2006 principally due to an increase in amounts invested during the current period and to the increase in interest rates. Net income before income tax provision for the six month period ended June 30, 2007 decreased to $1,075,000 from $1,306,000 for the six month period ended June 30, 2006 principally due to the decrease in sales, the increase in selling, general and administrative expenses and despite the slight increase in gross margins, the decrease in interest expense and the increase in investment and other income. Income taxes for the six months ended June 30, 2007 and June 30, 2006 consist of $25,000 in state income taxes that cannot be offset by any state net operating loss carry-forwards. As a result of the foregoing, net income for the six months ended June 30, 2007 was $1,050,000 compared to $1,281,000 for the six months ended June 30, 2006, a decrease of 18.0%. Earnings before interest expense, taxes, depreciation and amortization, and stock based compensation (EBITDA) for the six month period ended June 30, 2007 decreased to $1,623,000 from $1,927,000 for the six month period ended June 30, 2006. Listed below is the EBITDA reconciliation to net income: Six months ended June 30, 2007 2006 ---- ---- Net income $1,050,000 $1,281,000 Interest expense 182,000 228,000 Tax expense 25,000 25,000 Depreciation and amortization 278,000 287,000 Stock based compensation 88,000 106,000 -------- --------- EBITDA $1,623,000 $1,927,000 Material Change in Financial Condition - ------------------------------------------ Working capital increased to $17,803,000 at June 30, 2007 compared to $17,176,000 at December 31, 2006. The ratio of current assets to current liabilities increased to 5.5 to 1 at June 30, 2007 from 4.9 to 1 at December 31, 2006. Net cash used in operations for the six-month period ended June 30, 2007 was $131,000, primarily attributable to the increase in inventory and the decrease in accrued expenses and customer advances that was partially offset by the net income for the period, the non-cash amortization of intangible assets, the decrease in accounts receivable and the increase in accounts payable. Net cash provided by operations for the six month period ended June 30, 2006 was $2,054,000, primarily attributable to the net income for the period, the non-cash amortization of intangible assets and stock based compensation, a decrease in accounts receivable and other long term assets, and an increase in accounts payable that was partially offset by an increase in inventory and a decrease in accrued expenses and customer advances. Cash flows used in investing activities for the six-month period ended June 30, 2007 was $656,000, attributable to the purchase of marketable securities and property and equipment that was partially offset by the sale of marketable securities. Cash flows used in investing activities for the six-month period ended June 30, 2006 was $2,633,000, primarily attributable to the purchase of marketable securities and property and equipment that was partially offset by the sale of marketable securities. Cash flows used in financing activities for the six-month period ended June 30, 2007 was $648,000, attributable to the repayments of long term debt that was partially offset by proceeds from the issuance of long term debt and stock option exercises. Cash flows used in financing activities for the six-month period ended June 30, 2006 was $548,000, attributable to the repayments of long term debt that was partially offset by stock option exercises. In June 2007, the Company entered into an amended $3,000,000 credit facility with a commercial lender secured by accounts receivable, inventory and property and equipment. In April 2005, the Company entered into a five-year $5,000,000 Term Loan Agreement to finance the acquisition of Tulip and its manufacturing affiliate. In June 2007 the interest rates on both the Term Loan Agreement and the credit facility were reduced. The credit facility bears interest equal to the sum of 1.00% plus the one-month LIBOR (5.32% at June 30, 2007) and the Term Loan bears interest equal to the sum of 1.15% plus the one-month LIBOR. The credit facility will continue from year to year unless sooner terminated for an event of default including non-compliance with certain financial covenants. Monthly principal payments under the Term Loan are approximately $60,000 per month and commenced in June 2005. In April 2005, the Company entered into a five year $2,000,000 Promissory Note with the selling shareholders of Tulip at an interest rate of prime plus 2.00% (8.25% at June 30, 2006). Principal payments of $100,000 were made on a quarterly basis along with accrued interest. In June 2007, the Company refinanced the balance due on the Promissory Note of $1,050,000 with its primary commercial lender. Under the terms of a new Term Loan, monthly payments of $35,000 will be made over a thirty-month period, commencing August 2007, along with accrued interest at a rate of 1.15% plus the one-month LIBOR. The Company's contractual obligations and commitments are summarized as follows: Less than 1-3 4-5 After 5 Obligation Total 1 Year Years Years Years - ---------- ----- ------- ----- ----- ----- Long-term debt $4,563,000 $1,100,000 $2,808,000 $655,000 - Capital lease Obligations 4,000 4,000 - - - Operating leases 2,992,000 601,000 1,592,000 799,000 - ---------- --------- ---------- ------- --- Total contractual obligations $7,559,000 $1,705,000 $4,400,000 $1,454,000 - 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 - ------------------------- In April 2005, the Company completed the acquisition of Tulip and its operations became part of the Company's Electronics Group. The Company's Electronics Group and the Custom Division of its Power Group are heavily dependent on military spending. The events of September 11, 2001 have put a tremendous emphasis on defense and homeland security spending and the Company has benefited from an increasing defense budget. The Company has recorded a significant increase to its backlog since the beginning of the year and at June 30, 2007, its backlog was approximately 55.2% higher than the prior year. Consequently, in order to support this increase in backlog our inventory levels at June 30, 2007, are significantly higher than December 31, 2006 levels. The Company remains confident that it will have a stronger half of 2007. Although the Electronics Group and the Custom Division of the Power Group are pursuing several opportunities for reorders, as well as new contract awards, the Company has normally found it difficult to predict the timing of such awards. In addition, the Company has an unprecedented amount of new opportunities that are in the prototype or pre-production stage. These opportunities generally move to a production stage at a later date but the timing of such is also uncertain. There is no seasonality to the Company's business. The Company's revenues are generally determined by the shipping schedules outlined in the purchase orders received from its customers. The Company stratifies all the opportunities it is pursuing by various confidence levels. The Company generally realizes a very high success rate with those opportunities to which it applies a high confidence level. The Company currently has a significant amount of potential contract awards to which it has applied a high confidence level. However, because it is difficult to predict the timing of awards for most of the opportunities the Company is pursuing, it is also difficult to predict when the Company will commence shipping under these contracts. A delay in the receipt of any contract from its customer ultimately causes a corresponding delay in shipments under that contract. Despite the increase in military spending, the Company still faces a challenging environment. The government is emphasizing the engineering of new and improved weaponry and it continues to be our challenge to work with each of our prime contractors so that we can participate on these new programs. In addition, these new contracts require incurring up-front design, engineering, prototype and pre-production 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 that may not be reimbursable. Furthermore, once the Company has completed the design and pre-production stage, there is no assurance that funding will be provided for future production. In such event, even if the Company is reimbursed its development costs it will not generate any significant profits. The Company is heavily dependent upon military spending as a source of revenues and income. However, even increased military spending does not necessarily guarantee the Company of increased revenues, particularly, when the allocation of budget dollars may vary depending on what may be needed for specific military conflicts Any future reductions in the level of military spending by the United States Government due to budget constraints or for any other reason, 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 addition of Tulip gives the Electronics Segment a more diversified customer base. The Company's business strategy is to expand its operations through strategic acquisitions. Through the past several years, the Company reviewed various potential acquisitions and believes there are numerous opportunities presently available. In April 2005, it completed the acquisition of Tulip. The Company has received offers from several financial institutions that have expressed an interest in helping the Company with acquisition financing. However, there can be no assurance it will obtain the necessary financing to complete additional acquisitions and even if it does, there can be no assurance that we will have sufficient income from operations of such acquired companies to satisfy the interest payments, in which case, we will be required to pay them out of Orbit's operations which may be adversely affected. The Company continues to review acquisition candidates but none have progressed beyond a preliminary due diligence stage. In addition, the Company continues to encounter a very competitive market with respect to valuations of acquisition candidates. During the second quarter of 2007, the Company expanded the activities of its investment banker to include the pursuit of alternative strategies, including the potential sale of the Company as a means of enhancing shareholder value. However, there is no assurance that a sale or any of the other strategic alternatives will be accomplished. 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 are certain statements which are not historical or current fact and constitute "forward-looking statements" within the meaning of such term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual financial or operating 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. Such forward looking statements are based on our best estimates of future results, performance or achievements, based on current conditions and the most recent results of the Company. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "may", "will", "potential", "opportunity", "believes", "belief", "expects", "intends", "estimates", "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. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Part II, Item 6A "Quantitative and Qualitative Disclosures About Market Risk", of the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 for a discussion of the Company's exposure to market risk. There have been no material changes to the Company's market risk exposures since December 31, 2006. Item 4. CONTROLS AND PROCEDURES The Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective. There has been no changes to our internal control over financial reporting during the three months ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 32 PART II- OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submissions of Matters to a Vote of Security Holders An Annual Meeting of Stockholders of the Company was held on June 22, 2007. The holders of 4,595,571 shares of Common Stock of the Company were entitled to vote at the meeting, the holders of 4,311,436 shares of Common Stock, or approximately 94% of shares entitled to vote at the meeting, were represented by proxy. The following action took place: The stockholders voted for the election of each of the following persons nominated to serve as a Director of the Company until the next annual meeting and until his successor is elected and qualified: Dennis Sunshine by 4,297,556 votes for and 13,880 against, Bruce Reissman by 3,796,034 votes for and 515,402 against, Mitchell Binder by 4,290,310 votes for and 21,136 against, Arthur Rhein by 3,619,497 votes for and 691,939 against, Bernard Karcinell by 3,872,190 votes for and 439,246 against and Lee Feinberg by 3,871,202 votes for and 440,234 against. The stockholders voted 4,296,208 for and 10,898 against the resolution relating to the appointment of Goldstein Golub Kessler LLP as the independent auditors and accountants for the Company for the year ended December 31, 2007 (4,329 votes abstained). Item 5. Other Information None Item 6. Exhibits Exhibit Number Description -------------- ----------- 31.1* Certification of the Chief Executive Officer Required by Rule 13a-14 (a) or Rule 15d-14(a). 31.2* Certification of the Chief Financial Officer Required by Rule 13a-14 (a) or Rule 15d-14(a). 32.1* Certification of the Chief Executive Officer Required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. 32.2* Certification of the Chief Financial Officer Required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. _________________ *Filed with this report. 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: August 10, 2007 /s/ Dennis Sunshine ------------------- Dennis Sunshine, President, Chief Executive Officer and Director Dated: August 10, 2007 /s/ Mitchell Binder ------------------ Mitchell Binder, Vice President-Finance, Chief Financial Officer and Director EX-31.1 2 certificationofceo.txt CERTIFICATION OF CEO EXHIBIT 31.1 I, Dennis Sunshine, certify that: 1. I have reviewed this report on Form 10-Q of Orbit International Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the business issuer as of, and for, the periods presented in this report; 4. The business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) *; (c) Evaluated the effectiveness of the business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the business issuer's internal control over financial reporting that occurred during the business issuer's most recent fiscal quarter (the business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the business issuer's internal control over financial reporting; and 5. The business issuer's other certifying officer I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the business issuer's auditors and the audit committee of business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the business issuers internal control over financial reporting. Date: August 10, 2007 /s/ Dennis Sunshine ------------------- Dennis Sunshine Chief Executive Officer * Indicates material omitted in accordance with SEC Release Nos. 33-8238 and 34-47986 EX-31.2 3 certificationofcfo.txt CERTIFICATION OF CFO EXHIBIT 31.2 I, Mitchell Binder, certify that: 1. I have reviewed this report on Form 10-Q of Orbit International Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the business issuer as of, and for, the periods presented in this report; 4. The business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) *; (c) Evaluated the effectiveness of the business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the business issuer's internal control over financial reporting that occurred during the business issuer's most recent fiscal quarter (the business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the business issuer's internal control over financial reporting; and 5. The business issuer's other certifying officer I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the business issuer's auditors and the audit committee of business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the business issuers internal control over financial reporting. Date: August 10, 2007 /s/ Mitchell Binder ------------------- Mitchell Binder Chief Financial Officer * Indicates material omitted in accordance with SEC Release Nos. 33-8238 and 34-47986 EX-32.1 4 certificationofceo906.txt 906 CERTIFICATION OF CEO EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis Sunshine, Chief Executive Officer of Orbit International Corp., certify, pursuant to 18 U.S.C. 1350, as enacted by 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (the "Periodic Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Orbit International Corp. Dated: August 10, 2007 /s/ Dennis Sunshine ------------------- Dennis Sunshine Chief Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Orbit International Corp. and will be retained by Orbit International Corp. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 certificationofcfo906.txt 906 CERTIFICATION OF CFO EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Mitchell Binder, Chief Financial Officer of Orbit International Corp., certify, pursuant to 18 U.S.C. 1350, as enacted by 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (the "Periodic Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Orbit International Corp. Dated: August 10, 2007 /s/ Mitchell Binder ------------------- Mitchell Binder Chief Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Orbit International Corp. and will be retained by Orbit International Corp. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----