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Orbit International Corp. Reports Operating Results (10-Q)

August 16, 2010 | About:

Orbit International Corp. (ORBT) filed Quarterly Report for the period ended 2010-06-30.

Orbit International Corp. has a market cap of $14.36 million; its shares were traded at around $3.1 with and P/S ratio of 0.54.

Highlight of Business Operations:

At December 31, 2009, we 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 $20,000,000

and $7,000,000, respectively, that expire through 2020. Approximately,

$16,000,000 of federal net operating loss carry-forwards expire between

2010-2012. In addition, we receive a tax deduction when our employees exercise

their non-qualified stock options thereby increasing our deferred tax asset. We

record 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. We estimate

our valuation allowance based on an estimated forecast of our 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.

Net income $ 141,000 $ 6,000

Interest expense 54,000 42,000

Income tax expense 17,000 27,000

Depreciation and amortization 72,000 181,000

- -

EBITDA $ 284,000 $ 256,000

= =

Net loss $(506,000) $(347,000)

Interest expense 111,000 88,000

Income tax expense 21,000 36,000

Depreciation and amortization 225,000 360,000

- -

EBITDA $(149,000) $ 137,000

= =

In April 2005, we entered into a five-year $5,000,000 term loan agreement

to finance the acquisition of TDL and its manufacturing affiliate ("TDL Term

Loan"). In December 2007, we entered into a five-year $4,500,000 term loan

agreement to finance the acquisition of ICS ("ICS Term Loan"). Principal

payments under the two term loan facilities were approximately $113,000 per

month. In December 2007, we also amended an existing $3,000,000 line of credit

facility with a commercial lender secured by accounts receivable, inventory and

property and equipment. In connection with the ICS Term Loan entered into in

December 2007, the interest rates on both term loan facilities and the line of

credit facility were amended to equal a certain percentage plus the one month

LIBOR (0.35% at June 30, 2010) depending on a matrix related to a certain

financial covenant. The line of credit facility was to continue from year to

year unless sooner terminated for an event of default including non-compliance

with certain financial covenants.

In April 2005, we entered into a five year $2,000,000 promissory note with the

selling shareholders of TDL ("TDL Shareholder Note") at an interest rate of

prime plus 2.00% (3.25% at June 30, 2010). Principal payments of $100,000 were

made on a quarterly basis along with accrued interest. In June 2007, we

refinanced the $1,050,000 balance due on the TDL Shareholder Note with our

primary commercial lender. Under the terms of the new term loan entered into

with our primary commercial lender ("TDL Refinanced Shareholder Loan"), monthly

payments of $35,000 were made over a thirty-month period (through January 2010)

along with accrued interest pursuant to the interest terms described below. The

TDL Refinanced Shareholder Loan was paid off in January 2010. As a result of

decreased revenue and profitability due to the customer contract delay for the

MK 119 that is recorded under the percentage of completion method, we were not

in compliance with two of our financial covenant ratios as of June 30, 2009. In

August 2009, our primary lender agreed to waive these covenant defaults. The

lender, in consideration of such waiver, assessed a waiver fee of $10,000 and

increased the interest rate on all term debt, including the TDL Term Loan, TDL

Refinanced Shareholder Loan and ICS Term Loan, and the line of credit equal to

the sum of 3.50% plus the one month LIBOR. In addition, we agreed to reduce our

line of credit from $3,000,000 to $2,500,000 until October 31, 2009, at which

time it was further reduced to $2,000,000.

(a) (b) (c) (d)

Period Total Average Price Paid Total Number of Shares(or Units) Maximum Number(or

Number of per Share(or Unit) Purchased as part of Publicly Approximate Dollar Value)

Shares(or Announced Plans or Programs of Shares(or Units) that May

Units) Yet Be Purchased Under the

Purchased Plans or Programs

- - - -

April 1- 30, 2010 - - - $ 2,085,000

May 1-31, 2010 - - - $ 2,085,000

June 1-30, 2010 - - - $ 2,085,000

- - - -

Total - - - $ 2,085,000

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